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TheStreet Open House

Tweet This: Twitter's IPO Is Speculative

Another way in is through one of at least three exchange-traded funds that are likely to add Twitter very quickly.

The Global X Social Media ETF (SOCL), First Trust IPOX 100 Index Fund (FPX) and Renaissance IPO ETF (IPO) can all add Twitter within the first two weeks of trading. Of the three funds, it is likely to have the largest weighting in SOCL. According to a company spokesman, Twitter is likely to be a top five holding in SOCL, which, if correct, would put its weighting between 6% and 10%.

Twitter has clearly changed many aspects of life for people who are already users of the service. People find out about news from Twitter, products and services are promoted on Twitter and people are able to interact with friends, professional athletes and other performers in ways they never could before. All of that will continue to attract new users.

The company's success or failure will boil down to its ability to monetize the potential growth and to remain relevant as technology and social media needs evolve.

It is very important for anyone thinking about buying shares to realize that an initial purchase in the first few days of trading is far more of a speculation than an investment.

Speculation
is often treated as a dirty word but it is far less so when people realize that is what they are doing. Buying an IPO with no earnings per share on the first day of trading is speculating and will not be suitable for too many financial plans.

But for the person who realizes this and wants to throw a few dollars at it, go ahead. Just don't kid yourself and don't put in more than you can afford to lose.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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