Twitter makes its market debut

Microblogging website Twitter generated feverish excitement among investors ahead of its flotation.

Twitter launched its initial public offering (IPO) this week, marking the biggest technology flotation since Facebook in May 2012. Shortly before it floated, it raised its estimate of its shares' value by 25% amid high demand, saying they would sell at over $23. That valued the micro-blogging site at around $14bn.

Twitter is selling 13% of the company, which will raise around $2bn. Twitter is seven years old and has yet to make a profit. Breakeven is expected in 2015. It has 218 million monthly users.

What the commentators said

But amid all the "hoopla" surrounding Twitter's IPO, only one thing really matters, said Miriam Gottfried in The Wall Street Journal: the group's revenue growth. Some analysts reckon it can grow sales six or sevenfold over the next five years.

Investors should treat Twitter with caution, said Economist.com's Schumpeter blog. Revenue forecasts look a stretch, given that its growth in the US is slowing and it is generating far less revenue from foreign users, who make up 80% of its audience.

What's more, the group "has been coy about exactly how its advertising machine will be able to generate" the huge revenues underpinning the "lofty" valuation implied by its IPO price. The price-to-sales ratio of around 26 is around the same level as Facebook when it went public. The huge excitement generated by this week's IPO could fade quickly.

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