Twitter started its first day as a public company on the New York Stock Exchange with the first shares trading hands around the $48 level late in the trading day Thursday.

The company raised more than $18 billion in an initial public offering that was priced at $26 per share on Wednesday. When the first shares began trading Thursday morning, they were trading hands at around $45.


Twitter stock gained 73 per cent from its IPO price on its first day of trading Thursday. (Associated Press)

The stock briefly crossed the $50 level before settling into a range between $47 and $48 through the afternoon. It closed at $44.90, up $18.90.  The narrow price range indicated that people felt it was "pretty fairly priced," said JJ Kinahan, chief strategist at TD Ameritrade. 

The immediate price spike "clearly shows that demand exceeds the supply of shares," said Wedbush analyst Michael Pachter.

Twitter shares didn't actually trade for more than an hour after the exchange opened, as it had to sort out the millions of buy and sell orders before starting to match buyers and sellers and come up with a market price.

When the dust settled nearing 11 a.m. ET, the first trade was at around $46 per share. The IPO sold off 10 per cent of the company, which means at $48 per share, Twitter is deemed to be worth more than $32 billion.

Research firm Outsell Inc. puts Twitter's fundamental value at about half of the IPO price, said analyst Ken Doctor. That figure is based on factors such as revenue and revenue growth.

"That's not unusual," Doctor says. "Especially for tech companies. You are betting on a big future."

"In hindsight, when you look at this, you almost think they left a little too much money on the table," said Roger Entner of Recon Analytics.

Skeptics exist

Despite the price jump in the early going, not everyone is convinced Twitter is a slam dunk investment. "With a price that pushes into the high 30s and beyond, Twitter is simply too expensive," analyst Brian Wieser said in a note to clients.

Wieser notes that at these levels, Twitter is now worth as much as many established companies, including Yahoo and Discovery Communications.

In Canadian terms, at current levels Twitter is deemed to be worth four times as much as Tim Hortons, and almost as much as CIBC.

With almost 240 million members, the company took in more than $1 billion last year, but has yet to turn a profit, losing $65 million in the last quarter.

When the idea of an IPO was first floated earlier this year, Twitter had thought it might sell shares somewhere in a range between $17 and $20 per share. As the IPO date neared, that range was bumped up to $23 to $25 a share, before being hiked to $26 for early investors.

Twitter is the most hyped IPO since Facebook went public last year, and the trading floor is something of a media circus. An Associated Press reporter tweeted Thursday that media outnumbered traders on the floor by 5-1.