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Back down to earth: Twitter shares fall after its sizzling Wall Street debut

“A bit like an IPO hangover” is how one analyst described it.

A pair of traders work in their booth on the floor of the New York Stock Exchange earlier
A pair of traders work in their booth on the floor of the New York Stock Exchange earlier
Image: Richard Drew/AP/Press Association Images

TWITTER SHARES RETREATED earlier, a day after a sizzling debut on Wall Street, as some of the frenzy about the popular messaging service faded.

The stock slipped 7.24 per cent to close at $41.64 — a day after a stunning gain of 72.69 per cent on its first day of trading on the New York Stock Exchange after a $1.8 billion initial public offering.

Jon Ogg at 24/7 Wall Street said today’s sentiment was “a bit like an IPO hangover.”

“Keep in mind that Twitter is valued at more than 50 times sales now, something almost unheard of over the past decade,” Ogg said.

Some analysts said the debut was helped in part by a shortage of Twitter stock, and that most of the 70 million shares were reserved by the underwriters.

Brian Wieser at Pivotal Research, who downgraded the stock after the opening surge, noted that “our very positive view on the company hasn’t changed” but that the valuation seems too high to justify its price.

“Our view was positive going into the process. Twitter went through around its IPO and came out more favourably in most ways by the time the stock started trading.

“Our call on the stock is simply a matter of how much Twitter is worth given the scale we assume the company will realise over time.”

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Twitter’s market capitalisation, based on its stock price, fell back to around $22.6 billion after topping $24 billion on Thursday.

© AFP 2013

Read: Twitter stock grew by 73 per cent on a ‘spectacular’ opening day

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