$TWTR shares have been soaring the last few days. The valuation is simply absurd, but as you can see from the graph, the stock keeps going up day after day. In four days, it has gone up from about $60 to a close of $73.31 today.
The valuation is absurd, but the graph above is the typical IPO graph, in which the stock opens up the first day, goes down, but it is only until it reaches the high of the first and second day that it soars.
And indeed, the day $TWTR went past the $50 of the first day, it just kept going and I suspect it will continue doing so.
Simple, $TWTR’s float is tiny. Today, 82 million shares of $TWTR traded, but there are only 70 million shares available for trading. So, if 50,000 people and 20,000 institutions decide they want to own 1000 $TWTR shares (and I have had at least four acquaintances ask if it was a good investment), then there will be few shares available for trading and the stock will go up. Like it is doing right now…
Think about it, more and more people want to own 100,200 or whatever shares, they hear it is going up and even more want it. Even if it is absurdly expensive. It may be the beginning of a cult stock and there are few shares to have around.
So, $TWTR goes up, not because of short covering, or because people are speculating, it goes up because its shares are scarce, very scarce.
In fact, the $TWTR IPO has been similar to the $FB IPO; the difference being that $FB did the IPO technical ride up it in slow motion.
A very similar graph occurred with $FB except there were of shares to trade, lots of them, there is almost two billions of shares available for trading. In this case very few shares are available but a sort of cult $TWTR shares is forming.. For those that do not seem the similarity, the FB graph is the same but took a year and a half to do its thing. Sort of like $CUDA, which is doing the same, but very fast.
Here is $FB
So, I think $TWTR will keep going up, and one day it will fizzle, but it seems that that day is not close.