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Twitter Goes Public And Its Stock Price Soars


From NPR News, this is ALL THINGS CONSIDERED. I'm Audie Cornish, this week at NPR West in California.


And I'm Melissa Block in Washington, D.C.


BLOCK: Ringing the bell to open trading on the New York Stock Exchange today, @SirPatStew, @vivienneharr and @CherylFiandaca - all of them big users of Twitter - to mark the day the social networking site became a publicly traded company.

CORNISH: @SirPatStew is Sir Patrick Stewart of "Star Trek" fame. Nine-year-old Vivienne Harr used Twitter to spread awareness of child slavery. And Cheryl Fiandaca is a spokeswoman with the Boston Police Department. She relied on Twitter during the Boston Marathon bombing in April to share key updates with the public.

BLOCK: Well, after trading started, Twitter stock shot up from the initial price of $26 per share to more than $45, and it stayed there for most of the trading day, closing within pennies at $44.90. NPR's Steve Henn joins us now from Silicon Valley to walk us through the details. And, Steve, how do you explain why Twitter stock traded so high above the initial price?

STEVE HENN, BYLINE: Well, basically, it's a function of supply and demand. Twitter has become a cultural force. The pope tweets, President Obama tweets. We talk about tweets and hashtags on the air all the time.

BLOCK: We do.


HENN: So hundreds of millions of people use Twitter. Billions of people know about it. But in the end, Twitter actually didn't end up selling that much stock. It offered just 70 million shares. That's 13 percent of the total company. And so while interest in Twitter is enormous, the supply of stock was kind of tiny. And that mismatch between supply and demand seems to be driving the price more than earnings or Twitter's business fundamentals.

A lot of investing professionals I've spoken with about this said that this is all by design. They expect Twitter to come back to Wall Street and try to issue more stock a few months from now or a few years from now. And they say Twitter is trying to create goodwill among investors, generate some excitement about its stock so that later, people are eager to invest again.

BLOCK: So, Steve, a basic question here. Twitter yesterday was selling stock for $26 a share to big investors. If I as, you know, Joe Schmo or Jolyn Schmo wanted in on that great deal, would I be out of luck?

HENN: Yeah. I mean, basically, the people who got to buy at that price are people who participate in new IPOs all the time. Twitter really ran kind of an old fashioned IPO, and that meant that retail investors, people like you or me who might be fans of the company or interested in buying the stock, really didn't get a chance to buy anything until shares started trading basically at $45 a share this morning.

And the thing to remember about all that is the people who were selling the stock this morning are the same folks who bought it last night at that low price. So while Twitter raised close to $2 billion in its IPO to finance its growth, Wall Street's big investment funds made roughly $1.5 billion in just a matter of minutes this morning.


HENN: Yeah. But, you know, if you're still interested in the stock, now you can go to your broker. And if you're willing to pay, you know, $45 a share, you can go ahead and do it.

BLOCK: OK. Well, what does Twitter's business model look like today as opposed to the market for its stock? Is it believable that the company can generate the kind of revenue and the profits that it would need to justify the share price?

HENN: It's possible. Plausible might be a bit of a stretch. I mean, Twitter makes a lot of its money from advertising but it's tiny in comparison to its biggest competitors, Google and Facebook. You know, they measure their audience in billions and Twitter is just a fraction of that.

BLOCK: OK. NPR technology correspondent Steve Henn. Steve, thanks.

HENN: My pleasure. Transcript provided by NPR, Copyright NPR.

Steve Henn
Steve Henn is NPR's technology correspondent based in Menlo Park, California, who is currently on assignment with Planet Money. An award winning journalist, he now covers the intersection of technology and modern life - exploring how digital innovations are changing the way we interact with people we love, the institutions we depend on and the world around us. In 2012 he came frighteningly close to crashing one of the first Tesla sedans ever made. He has taken a ride in a self-driving car, and flown a drone around Stanford's campus with a legal expert on privacy and robotics.
Melissa Block
As special correspondent and guest host of NPR's news programs, Melissa Block brings her signature combination of warmth and incisive reporting. Her work over the decades has earned her journalism's highest honors, and has made her one of NPR's most familiar and beloved voices.