Twitter shares nosedived earlier this week when they went on sale on the stock market for the first time.
The share price on Tuesday was the lowest level they had been since the company made their Initial Public Offering (IPO) back in November 2013, dropping to 17.8% and closing at $31.85. It is estimated that approximately 135 million shares were traded, a figure ten times higher than normal. Stock market analysts attributed the drop in share price to the ending of a lockup period which stopped the majority of the shareholders, mostly early investors and company insiders, from being able to sell their shares. This is a common practice for relatively young companies which decide to go public, as it stops the market from being swamped with shares.
Twitter unable to compete
The end of the lockup period arrived at the same time as people were voicing concerns about the social networking site’s ability to attract and hold a conventional audience. Twitter is often lauded as an indispensable tool for businesses in building a brand and engaging with potential customers. However, despite tweaking and improving their platform, Twitter failed to perform as well as expected, failing to experience the growth in users that technology companies usually enjoy. In March, Twitter announced that it had 255 million monthly users throughout the world, which showed only a 5% increase from December. U.S‑based engagement by its users declined by 3% in the last quarter and by 10% internationally, despite overseas being the area where growth is most expected.
The founder of Ironfire Capital, Mr. Eric M. Jackson, said, “Twitter is a great service but it’s a niche service. Despite everything Twitter’s management is trying to do to monetize its user base, I just don’t think it’s ever going to be a billion-user service like Facebook.”
Twitter has put its recent poor performance down to the changes being carried out on the platform, such as the redesign of its profile pages, an improved interface to make it easier to upload media to posts, and allowing users to import their cellphone contacts.