Thursday, November 7, 2013

Twitter's huge rally draws its share of skeptics

Twitter's debut as a publicly traded stock couldn't have gone much better Thursday, yet market pros remained cautious about its future.
In fact, it was the ferocity of the share price increase that scared even those who are bullish on the microblog social media network.
"Twitter the product is one of the most amazing things I've ever seen in 31 years of tech investing," Roger McNamee, Elevation Partners co-founder, said on CNBC's "Fast Money Halftime Report." "It just came out of nowhere."
However, investors know there's a difference between a great company and a great stock, and Twitter watchers fretted that enthusiasm may be outpacing fundamentals.
It's a trading stock today. Maybe it will be a trading stock for a while," McNamee added. "Me personally, I wouldn't buy here. Then again, I would never buy on the day of any IPO. That's just not how I work. I wait until things settle out and people have figured out what it's really worth. Once the emotions come out of it, that's the time I look to buy a stock like this."
Bob Peck, the first analyst to put a "buy" rating on the stock, told CNBC investors shouldn't be overly impressed with the debut and understand instead that they'll need to be in it for the long haul if they want to get real value.
He spoke as Twitter rolled to a 72.7 percent single-day gain to close at $44.90 after pricing at just $26.
The boom drew its share of skepticism, with Pivotal Research christening the stock with its first "sell" rating, based primarily on valuation. "With a price that pushes into the high 30s and beyond, Twitter is simply too expensive," the firm said.

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