Here’s a Different Way to Own a Little Bit of Twitter
Twitter Inc. (NYSE:TWTR) launched its initial public offering on Thursday with great fanfare. Shares, which were priced at $26 on Wednesday night, opened for trading at $45.10, a jump of 73 percent. After climbing as high as $50.09 in early trading, the action calmed down by the early afternoon and the stock was back to hovering around its opening price.
Leading up to the debut, there was an enormous amount of conversation about the issue of whether a retail investor should jump on the bandwagon. Data compiled by researchers show that most of the price gains experienced on a stock’s opening day are made in the first few trades. That is, between the IPO price — at which only a few, large investors are allocated shares — and the opening price. With Twitter, this was the 73 percent jump from $26 to $45.10 per share. Those who were able to buy shares at $26 could sell now and make a sweet return. Those who buy now, though, are unlikely to see much more growth out of the stock.
The reason is that the company claims an enormous valuation relative to its sales and earnings. Twitter reported that it has lost $133.8 million so far this year, up from $70.6 million over the same period in 2012, and it’s unclear when the company will move out of the red.
Still, it’s hard not to want to get in on the action. Short of just biting the bullet and buying some shares, investors can take a look at some publicly traded funds that are likely to pick up some Twitter stock in the near future.
One publicly traded venture capital fund with a stake in Twitter is the Firsthand Technology Value Fund (NASDAQ:SVVC). As of October 31, the Firsthand Technology Value Fund reported that it held 194,000 shares of preferred Twitter stock and 812,200 shares of common stock, representing approximately 10.3 percent of the fund’s estimated gross assets and making Twitter the fund’s second-largest holding. Incidentally, Facebook (NASDAQ:FB) is the fund’s first largest holding, at about 12.6 percent of estimate gross assets. Although down about 5.6 percent on Thursday, shares of the Firsthand Technology Value Fund are up nearly 33 percent on the year.
GSV Capital Corp. (NASDAQ:GSVC) is a publicly traded BDC specializing in emerging growth and venture-backed private companies with about 15 percent of its assets invested in Twitter. GSV Capital said: “Twitter has a dynamic model with its gigantic network effects and high engagement. The integration into Apple’s iOS has accelerated usage and engagement rates.” GSV Capital also owns Facebook. Shares of GSV Capital, also down about 7 percent on Thursday, are up 104 percent on the year.
Don’t Miss: The Complete Story of Twitter, the IPO.