Twitter Shares Rise 73% in First Trades on NYSE

There's no doubt that Twitter is trending. The microblogging service launched its initial public offering Thursday with great fanfare.

APTOPIX Twitter IPO
Mark Lennihan/AP
But not many individual investors were able to scoop up shares of the seven-year-old company at the IPO price. That's because the big boys -- institutional investors such as mutual funds and hedge funds -- grabbed those.

So the question is -- in 140 characters or less -- should you buy in now that it's trading like any other issue?

There's no easy answer, but we'll run through some of the pros and cons.

First, Twitter (TWTR) is off to a fast start. The initial offering of 70 million shares was priced at $26 dollars, and the first trade was at $45.10 a share. That's a 73 percent jump. Trading, no doubt, will be very volatile for at least the next few days.

Proponents like it because Twitter has become part of the vernacular, especially for people age 18-to-34 -- those most targeted by advertisers.

They live in the Twitterverse, sending out messages of up to 140 characters. Some are as mundane as what you had for lunch today. Others are earthshaking such as when Twitter played a key role in the Arab Spring revolution.

You can post your messages, and you follow other people who post. Entertainers Katy Perry, Justin Bieber and Lady Gaga all have more than 40 million followers. %VIRTUAL-article-sponsoredlinks%President Obama has nearly that many.

The company has 232 million users worldwide, and its user base is still growing rapidly, up 39 percent from a year ago.

The IPO price was raised several times in the weeks leading up the Thursday debut here, but still came in at what analysts consider a reasonable level, at least in comparison Facebook (FB) and other social networking companies.

Now for some of the cons.

The biggest negative is that Twitter has never made any money; never turned a profit. And it doesn't expect to earn a profit until 2015 at the earliest.

Twitter is often compared to Facebook, but remember, Facebook was growing at a faster pace when it was the same size as Twitter is now. So it's public offering comes at an earlier stage of development.

Analysts say the company's effort to monetize its huge fan base is still at an early stage. It hasn't proven that advertisers can successfully appeal to its audience, and that users won't be turned off be turned off by too many adds.

And Twitter's pace of growth has slowed for seven consecutive quarters.

There are still plenty of skeptics who say Twitter could be a flash in the pan. They say there's no guarantee it will even survive.

The bottom line is, many advisers say there is no urgency to get into the stock right now. It's likely to be volatile of the coming days and weeks. So you might want to take a little bit of time to judge the company and its stock market value, before taking a leap of faith.

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Who's Minding The Twitter? Big Companies' Ill-Fated Tweets
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Twitter Shares Rise 73% in First Trades on NYSE

Some tweet gaffes have arisen from companies poking fun at -- or making light of -- deadly serious events.

Such was the case with a Kenneth Cole tweet gone awry. The fashion designer took heavy flak last winter for a tweet that riffed off the pro-democracy protests in Egypt's Tahrir Square to hawk his new collection: "Millions are in Uproar in Cairo. Rumor has it they heard our new spring collection is now available online," he tweeted.

The attempt at a comical spin was not well received.

"The company attempted to leverage dry humor and make a gentle, joking reference to current events, however Cairo is clearly not the best opportunity," Wisneski says.

Cole himself later expressed his regret on Facebook. "I apologize to everyone who was offended by my insensitive tweet about the situation in Egypt," he said. "I've dedicated my life to raising awareness about serious social issues, and in hindsight my attempt at humor regarding a nation liberating themselves against oppression was poorly timed and absolutely inappropriate."

Aflac paid the price for a Tweet it didn't even send. In March 2011, comedian Gilbert Gottfried fired off a series of tweets that joked about the devastating Japanese earthquake and tsunami, including, "I just split up with my girlfriend, but like the Japanese say, 'They'll be another one floating by any minute now.'"

Gottfried, who had long provided the familiar voice of the Aflac duck, was immediately fired. He apologized, saying, "I meant no disrespect, and my thoughts are with the victims and their families."

Although Aflac bounced back from the Twitter backlash, Gottfried's offensive tweet cost the company its voice, Parks says.

In 2010, a Vodafone UK employee attacked gays in a tweet, using a Twitter account the company reserves for handling customer complaints.

"This is a classic case of ignorance by an employee that should never have had access to their official platform, obviously," Wisnefski says. "Five years ago, a customer service staff member of a large company would never have been able to make a statement and deliver it to millions of individuals. Marketers and advertisers need to trust and understand who is handling their social media accounts."

Without a lot of fanfare, Starbucks (SBUX) started slashing prices of its Verismo brewers. The entry-level and high-end models are selling through Starbucks' website at 25% discounts for $149 and $299, respectively.

It doesn't matter if this is a temporary holiday promotion. Starbucks just introduced the single-cup espresso brewer three months ago. It can't be selling well if the java giant is resorting to dramatic markdowns. Maybe folks just don't care about making espresso at home. Maybe Starbucks got cocky by putting out an overpriced coffee maker that only brews a limited number of Starbucks pods.

And finally, we have this tone-deaf blunder from United Airlines (UAL).

A United passenger sent out a series of bitterly frustrated tweets, complaining that her flight had been canceled. They included: "Thanks @unitedairlines for randomly canceling my miles booked ticket for tonight, taking the miles & not letting me rebook for lack of miles," and, eventually, from her rebooked flight, "Thanks to @unitedairlines I can finally watch that Frasier episode I missed in 1994."

The airline's official Twitter controller tweeted back this sarcastic response: "I hear the blues a-callin', Tossed salad and scrambled eggs," -- lyrics from the theme song to Frasier.

United Airlines later issued this apology: "Speaking of eggs - they are all over our face! We missed the tone of the customer's tweet and apologize to those who were offended," the company said.

Egg on its face, indeed.

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