“Maybe Twitter was the bell!”
Opening day for Twitter (TWTR–NYSE) felt like 1999. The stock was priced at $26, opened at $45.10, traded as high as $50.25 before closing at $44.90….Wow! All of that appreciation f0r a mere 45 times trailing twelve month revenues (revenues mind you, there are no earnings). Meanwhile, Art Cashin (CNBC regular, Director Floor Operations UBS Securities and perma-bear) was commenting, “Nobody rings a bell at a top” and Jim Cramer was positing “Maybe Twitter was the bell.” That might be true, but as a former colleague of mine reminded me that “you can have a whole series of ‘Twitter’ type deals over a period of years before a real top is in place. Twitter retreated to $41.65 (7.24%) on Friday.
Kudos to CNBC and the New York Stock Exchange!
Both did a super job of giving individual investors a chance to see the process that the exchange uses to open an initial public offering for trading after its price is agreed upon by the company and the underwriters (in Twitter’s case, $26). The process, because of the unprecedented access given to CNBC’s Bob Pisani, was exciting and very transparent. Unfortunately this clip only covers the last few seconds before the open. Bids (buyers) and Offers (sellers) had come together with only a 10 cent spread ($45 bid, $45.10 offered). Earlier they were as much as $5.00 apart ( say $43 bid to $48 offered). BTW there were millions of shares on both sides of these quotes. Anyway, regardless of my opinion on the value of Twitter, both The Exchange and CNBC did a great job.
Meanwhile, back at the ranch…
Some interesting non-Twitter related things were happening. The general market outside of twitter was horrible with the NASDAQ index down almost two percent. Third Quarter GDP came in Thursday, up 2.8% (in spite of the government shutdown and threatened default) vs. 2.5% in the second quarter. Of course, the boo birds reined in the elation by pointing out that the uptick was due to an increase in inventories. Still, it was one of the best quarterly GDP performances since the 2008 blow-up.
Now, in case you don’t remember, good news has been bad news. It’s bad because it signifies a stronger economy and is the kind of data that might cause the Fed to taper sooner rather than later. A normal bond market reaction to this type of report would be a sell off in bonds and the concomitant rise in yields. That did not happen Thursday. People were buying bonds. The ten-year Treasury yield fell from 2.65% to 2.60%. Maybe because fear was in the air as European Central bank head, Mario Draghi made statements regarding the low rates…saying that they ‘may be in place for some time and that they might even go lower.’ This raises the specter of a sick “Eurozone” presenting a potential minefield on the United States’ slow road to recovery.
Interestingly, this all reversed Friday, including the market (in a big way), as the October jobs report (despite the government’s craziness) came in well above expectation with the price on the ten-year U.S. treasury dropping and the yield jumping to 2.75%, thus signifying a stronger economy . Stocks rocketed too. I guess good news was good news for a change!
Are we Partying like 1999?
Let me take you back to the “golden days of yesteryear.” Remember in 1999 anything associated with the internet was Golden…all telecom service providers, telecom equipment providers, component suppliers to the web(+PC & infrastructure hardware), software, anything with ‘dot.com’ in the name. I can go on and on. Today’s market has its favorites (cult stocks), names like Tesla, Facebook, Amazon (now maybe Twitter), etc. It does not appear to be all-encompassing like the tech bubble. It does not look like we are partying a la 1999.
How do you feel?
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