NEW YORK (TheStreet) -- Twitter (TWTR - Get Report) unlocked the gates and social media investors ran for the exits. Today is the first day that many Twitter insiders have been permitted to sell their shares. And sell, sell, sell they did. The stock price dropped nearly 18% today.
On StockTwits.com, investors blamed Twitter insider selling for sparking a broad sell-off in social media stocks.
? Tracey Ryniec (@TraceyRyniec) May. 6 at 03:29 PM
Selling restrictions expired on 480 million shares held by Twitter insiders Tuesday, enabling early investors and employees to cash out of shares that had fallen nearly 50% since February all-time highs. Investors figured that if Twitter insiders didn't think the stock was worth its 155 times expected 2015 earnings multiple, then they probably shouldn't bank on the micro-blogging company living up to the hype either.
$TWTR well it's nice to see the conviction of insiders for the long term development of twitter ..........-- BiopharmaPro (@BiopharmaPro) May. 6 at 03:25 PM
Many took the argument further to question the valuation of all social media stocks. If Twitter wasn't worth 155 times earnings, then why should anyone hold any social media stock with multiples in the high double digits?