Twitter's Initial Public Offering: What You Need to Know

Updated from 11:56 a.m. ET to reflect closing share prices, Capital One ShareBuilder comment and data

(TheStreet) -- Twitter  (TWTR) had a blockbuster first day of trading as a public company, after the micro-blogging site raised nearly $2 billion in capital in an initial public offering that valued the fast growing company in excess of $18 billion, when counting stock option grants.

Investors following the company's IPO process, which began with a Tweet in early October, weren't disappointing.

Twitter shares rose nearly 73% from its IPO pricing on Wednesday evening and accounted for a large portion the trading volume on the New York Stock Exchange (NYX). 

Twitter shares closed at $44.90, up 72.69% from its IPO pricing of $26 a share. After its first day of trading, Twitter is now valued at roughly $24 billion, more than a majority of the companies in the S&P 500 Index.

In contrast to Facebook's (FB) blockbuster May 2012 listing, Twitter's IPO went off without any technical hitches, allowing for a scandal-free first day of trading.

Dan Greenshields, president of Capital One ShareBuilder, said Twitter stock trades accounted for about 50% of the online brokerage's volume on Thursday. Greenshields said in a telephone interview after the market close that Twitter's IPO also resulted in the Capital One ShareBuilder's highest daily trading volume of the year.

"I am very pleased. It is positive that the listing went off without a hitch," Greenshields added.

Twitter opened trading at $45.10 up over 70% from its IPO pricing, and well above levels most investors and analysts would recommend investors buy shares.

After reaching a share price in excess of $50 a share in early trading, Twitter closed down 20 cents for the day, meaning retail investors buying into the IPO weren't likely to capture much of Twitter's day-one stock surge. The company now has a bigger market capitalization than tech and media powerhouses like Sony (SNE) and Netflix (NFLX).

Some analysts now see reason for caution. Brian Wieser, an analyst with Pivotal Global Research downgraded Twitter to 'sell' given Twitter's opening share price. The analyst had initiated Twitter with a 'buy'rating and a $29 a share price target.

"At a $45 price level (the stock opened at $45.10), the enterprise value is approximately $30bn...or almost the same valuation as Discovery Communications, and nearly the same valuation as CBS or the combined Publicis Omnicom Group...or even Yahoo (some will argue that Yahoo's stake in Alibaba is worth this much, too)," Wieser wrote in a downgrade of Twitter to 'sell' based on a revised $30 a share price target.

Twitter's day-one close puts the company at a valuation multiple in-line with benchmarks analysts had expected the company to hit by the end of 2014. It indicates investors buying into Twitter's first day of trading should expect to be invested for the long-term.

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