This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Will the Drunken Twitter IPO Double?

NEW YORK (TheStreet) -- Earlier this week on TheStreet, Doug Kass argued that "Twitter's shares will likely double in the first month of trading -- or maybe sooner."

I'm not here to question Kass' wisdom.

First, he's walked Wall to Nassau, Nassau to Pine, Pine to Broadway, Broadway to Wall quite a few times in his life. That's called having been around the block.

Second, he's probably correct, but that doesn't mean Kass doesn't deserve to hear it from a member of an upper-level gallery that contains primarily peanuts, but the random nugget of wisdom.

Let's say Twitter gets priced at $22 a share. That's the number Kass used for discussion's sake. It wouldn't shock me to see Twitter open at $44 a share. A double. And, bingo, Kass is correct. But, who benefits from that type of pop? Certainly not the retail investor.

You're not getting shares at the offering price. Well, you might be getting shares, but the rest of us most likely are not (though TheStreet's editorial policy prohibits me from trading or investing in them even if I could get them). As such, Kass sets up a scenario that concerns me.

While Twitter will not be, at least from chaos and glitch standpoints, anything like the Facebook (FB) IPO, the pain could be just the same for investors who chase an elusive, almost mythical double.

TWTR opens at $44. You chase it. Some report comes out reaffirming that mobile ad revenue will be robust, but growth will moderate just a bit. Or One Direction quits Twitter. Something scary to the business or something the media takes and runs with to create a spectacle. Either way, it doesn't matter. The stock could drop from its early morning IPO day price as fast, or faster, than FB did.

So you lost money on a stock that doubled! That's almost as bad as making an options trade, being right about the directional move, but losing all of your money because you didn't consider, or understand, the impact of time decay and premium pricing.

Or you get in at $44 and TWTR, miraculously, goes to $88 on day one or in the first week or month. Kass was correct any way you slice it then. It doubled before us retail slugs had a shot and then did it again, even more impressively when we did. But, as I often preach, a Vegas gamble steeped in luck and timing and other things you never could have seriously predicted does not make a strategy.

For many of us, psychology takes over. We'll think we did something extraordinary by catching this double. Then when AirBnB or Klout (for heaven's sake!) goes public, we try to repeat the magic. You can't do that. You give back all of the gains you made when you got lucky with Twitter.

Think of a doubling after the open on IPO day TWTR like an unbelievably hot woman or man at a bar. You know she or he is out of your league, but (and sorry to be crude, but often crude equals real life) she or he has had a bit too much to drink. That makes you look good. And even better in the dark. Magic happens.

But that's a one-off. That success -- as sweet as it was -- cannot be replicated on a consistent basis. Think about the TWTR IPO like a drunk girl or guy at the other end of the bar. Because, no matter how strong we think Twitter's business or popular (media geek) culture cachet is, it reflects the realities of an inebriated market investors cannot ignore in the often-elusive and risky search for a double.

--Written by Rocco Pendola in New York City

Rocco Pendola is a columnist and TheStreet's Director of Social Media. Pendola makes frequent appearances on national television networks such as CNN and CNBC as well as TheStreet TV. Whenever possible, Pendola uses hockey, Springsteen or Southern California references in his work. He lives in Santa Monica.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,563.30 -317.06 -1.88%
S&P 500 1,930.67 -39.40 -2.00%
NASDAQ 4,369.7730 -93.1290 -2.09%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs