Elon Musk’s buyout marks the end of nine years of public trading for Twitter Inc., which debuted with a bang but failed to match the success of some other tech heavyweights.
While the stock made a splash when it debuted on the New York Stock Exchange in November 2013, rising 73% on its first day, the company has since failed to impress investors as it has struggled to consistently grow its user base and build engagement .
Twitter’s stock has doubled during its time as a publicly traded company, which equates to growth of 8.4% per year. That’s lower than the S&P 500’s 11% annual return and the Nasdaq 100’s 15% gain.
“It certainly never lived up to what investors were hoping for when it went public, trading at about double what it was earlier this year,” said Alec Young, chief investment strategist at Mapsignals. “Most investors were disappointed with the stock’s performance, the growth, the penetration — it just seems like it never really took off with users and got the mass adoption that other services have.”
Musk has completed his $44 billion purchase of the social network, putting the world’s richest man at the helm of the social network after months of public and legal wrangling over the deal. The buyout will shut down Twitter about a week before the stock ticker “TWTR” turns nine years old.
Twitter’s underperformance compared to its social media peers largely reflects that the microblogging platform’s revenue growth has been consistently slower while others have been better able to monetize their user bases. Over the past five years, Twitter’s quarterly revenue growth has been 19%, compared to Meta Platforms Inc.’s 29%, Snap Inc.’s 50%. and 51% in Pinterest Inc.
However, Musk’s interest led the company to end its IPO on a positive note. It’s up 24% this year, making it the best-performing component of the S&P 500’s telecommunications services companies. Its shares have outperformed peers for the year, overshadowed by a sharp rally in stocks thanks to extraordinary interest rate hikes by the Federal Reserve, rising inflation and the possibility of a looming recession.
It’s been a wild ride for investors in Twitter stock with Musk in the driver’s seat.
“The rollercoaster he took Twitter shareholders on ended with a final squeal of joy for those who latched onto the ride,” said Suzanne Streeter, senior investment and markets analyst at Hargreaves Lansdowne. “While the price of $54.20 per share is still below the staggering heights of over $77 reached during the tech’s pandemic peak in March 2021, it is well above the $32 the company traded at a year later, just a few weeks before Musk announced his generosity the offer was on the table.”