Social-media darling Twitter continues to pickup a head of steam, while bets against it grow. On Thursday, Twitter moved as high as $74.73 before closing with a 4.8 percent increase at $73.31. Its shares are up an eye-popping 63 percent since a Nov. 7 close of $44.90, when the company first began trading.
What’s surprising about the upward trend is that Twitter has not announced any new recent developments , and yet, in the last week, it’s up 33 percent.
“They’re hoping top-line growth will lead to bottom-line growth,” said Arvind Bhatia, a financial analyst at Sterne Agee. “You have to buy in on the vision.”
This means investors are anticipating Twitter will eventually grow into a massive, Facebook-sized business. But that anticipation has little merit and is nothing more than cloudy speculation, based around Twitter’s selling point of it being the “revolutionizing” company. Thus far, their only selling point has been simply: Get big, and profits will flow.
That’s what’s driving the growth in Twitter’s stock. The hope that they too will be as big as Facebook. But as of now, that’s all it is, hope.
According to experts on Wall Street, Twitter is nothing more than a momentum stock with an end of the year rally caused by funds wanting to add Twitter to their portfolio, but they also believe that investors should seize the initial public offering and grab an early stake in a company that is only continuing to grow in popularity.
“Demand to borrow Twitter is pretty heavy,” said Alex Brog, a director at options tracking company, “with 69 percent of the shares that can be borrowed from lending programs being out on loan.”
Twitter didn’t meet its expectations when shares were first made available for short sales, offering 70 million shares at $17 to $20 each. Since then, shares have gained 64.4 percent, and only continue to grow, yet investors continue to bet on the stock heading back down because they feel there is a lack of appeal, and no foreseen way to profit from revenue.
Aside from its current popularity, Twitter doesn’t offer any reason for investors to believe it will continue to grow. While the company portrays itself to be the “revolutionizer” of social-media networks, they have not provided any reason for consumers to believe they are anything more than just another social network fad.