The Washington Post

Can we please stop talking about Twitter’s overhyped IPO now?

Twitter is going public this morning, a little bit of news you probably heard a dozen times by breakfast -- whether you use Twitter or not.

Everyone’s in a frenzy over the social network’s New York Stock Exchange debut. Pundits are raving about it. Investors are salivating over it. You will be hard-pressed to find a single media outlet this morning that isn’t running (1) an explainer on IPOs (2) a timeline or history of Twitter, possibly in tweets or (3) a live blog of the non-action on the NYSE floor.

Here’s the thing: IPOs are largely meaningless. And this IPO is particularly overblown.

Twitter CEO Dick Costolo (R) celebrates the Twitter IPO with Twitter founders Jack Dorsey (L), Biz Stone (2nd L) and Evan Williams on the floor of the New York Stock Exchange. (Reuters/Lucas Jackson)

An IPO is just a blip in the lifeline of a company -- some take off, some tank. They don’t necessarily augur the company’s long-term prospects. We all remember the great disastrous Facebook IPO of May 2012, which was plagued by technical glitches and weeks of disappointing, even negative, returns. Eighteen months later, the stock is up to over $48 a share, Facebook just reported solid Q3 earnings, and investors who held their shares through the bumpy post-IPO days made a profit. In the long run, that insanely hyped IPO was little more than a punchline for mediocre investing jokes.

The opposite can often be true, as well: Groupon was offered at $20 a share, opened at $28 … and is now below $10. Many of the big Internet stocks of the past three years have suffered a similar fate -- Demand Media and RenRen, the Chinese Facebook, among them.

Busts like Groupon have led some analysts to speculate about a “tech bubble,” a market rise that’s based more on hype than actual value. It’s fair to say that specter hangs over Twitter, too. The social network has not turned a profit once in its seven-year history, but it’s still valued at a whopping $31 billion. The network has yet to prove it has any place in the cultural mainstream -- keep in mind, only 15 percent of people who use the Internet also use Twitter -- and it’s unclear how it would monetize those users if it did. The $31 billion valuation is based merely on the hope, and the speculation, that Twitter will succeed.

That seems like the real reason people are so worked up over the Twitter IPO, whether or not they have any interest in investing themselves: It represents some sort of technophilic optimism about what social networks mean, or will mean, in our culture and economy. That, along with the fact that a crew of visionary nerds will get very, very rich off today’s offering, make the IPO a nice capitalist proxy for the American Dream.

But as nice as that all sounds, it’s important to realize that this IPO is pretty much meaningless in terms of predicting Twitter’s long-term success. And it’s particularly meaningless for you -- yes you, insignificant individual investor -- because you can’t even buy stock in the initial offering. That privilege is reserved for Wall Street bigwigs and mutual funds, the only ones, besides Twitter’s employees and early investors, who really have a stake in the whole thing.

Please remind me why we’re still talking about this?

Caitlin Dewey is The Post’s digital culture critic. Follow her on Twitter @caitlindewey or subscribe to her daily newsletter on all things Internet. (
Show Comments
Most Read
DJIA -1.29%
NASDAQ -3.25%
Last Update: 4:33 PM 02/06/2016(DJIA&NASDAQ)



Success! Check your inbox for details.

See all newsletters

Close video player
Now Playing

To keep reading, please enter your email address.

You’ll also receive from The Washington Post:
  • A free 6-week digital subscription
  • Our daily newsletter in your inbox

Please enter a valid email address

I have read and agree to the Terms of Service and Privacy Policy.

Please indicate agreement.

Thank you.

Check your inbox. We’ve sent an email explaining how to set up an account and activate your free digital subscription.