Want to buy shares of Twitter (TWTR)? Finance expert says wait

An illustration picture shows the logo of the Website Twitter on an Ipad, in Bordeaux, Southwestern France, January 30, 2013. REUTERS/Regis Duvignau
In the case of the Twitter IPO, the bird need not be in your hand immediately.

All of the chatter about Twitter’s IPO may make you want to rush in and buy shares, but don’t lunge for your portfolio just yet. Santosh Rao, senior equity analyst and head of research at Greencrest Capital, talked to Metro about why retail investors should wait to buy today’s hottest IPO.

1. You don’t have all of the information. According to Rao, companies give information to potential bulk investors ahead of time. “They’ve showed them the financials and they’ve given them more detail than you and I know,” said Rao. “[The institutional investors] know the risk and opportunities much better than we do.” As a public company, Twitter will have to disclose more information going forward, so retail investors can make more informed decisions.

2. It’s overpriced right now. Twitter stock began trading on Thursday at $45.10, closing at $44.90, but Rao said the value is more like $30. “It opened at $45 already and that’s when you get there, it’s too late,” said Rao. High demand for the limited shares drove up the price.

3. It will probably pull back. Rao said most stocks pull back after an IPO. “They always come back,” he said. “Wait for a pullback – don’t chase it. You never win the IPO in the first round.” He pointed to Facebook’s May 2012 IPO as an example, which dropped from $38.23 to $20.01 a share after two months – but the stock has since recovered, closing at $47 on Thursday.

Rao is not saying that retail investors shouldn’t buy Twitter stocks; in fact, he said that the company has a lot of potential. But Rao advised retail investors against “quick in and out” trading and suggested potential investors do their research and look at the long term when investing in the company.

Follow Andrea Park on Twitter: @andreapark



News
Entertainment
Sports
Lifestyle
National

At 91, Marvel creator Stan Lee continues to…

By Piya Sinha-RoyLOS ANGELES (Reuters) - Marvel Entertainment's chief emeritus Stan Lee may be in his ninth decade, but it hasn't stopped him from adding…

National

Islamic State says beheads U.S. journalist, holds another

Islamic State insurgents released a video purportedly showing the beheading of U.S. journalist James Foley, who had gone missing in Syria nearly two years ago.

Local

VIDEO: NYPD seeks shooter in East New York…

Cops are on the lookout for an unknown shooter who aimed and missed hitting a man on a bicycle, instead nearly striking a nearby officer in East New York.

Local

NYS state forces thrift shops comply with ban…

Nine New York City thrift shops were reprimanded by the state attorney general for selling children's clothes with drawstrings around the neck and waist.

Television

'Pretty Little Liars' recap: Season 5, Episode 11,…

Caleb's not a ghost. Spencer might still be an attempted murderer. And Hanna's going to die next week. In other words, we actually got some…

Movies

At 91, Marvel creator Stan Lee continues to…

Marvel Entertainment's Stan Lee is adding outposts to his creative empire to interest a new generation of children in super heroes of all shapes and sizes.

Television

Mira Sorvino explores immortality on 'Intruders'

Mira Sorvino's new show "Intruders" centers around a secret society that achieves immortality by taking over the bodies of other people.

Television

5 things you need to know about new…

"Doctor Who" returns Saturday with a new star, Peter Capaldi. Here's some things to know about him (mainly his turn as sweary spin doctor Malcolm Tucker).

MLB

Shane Greene travels unlikely road to Yankees stardom

Shane Greene was throwing a bullpen session on a quiet field at Daytona Beach Community College one day when the ball started moving.

NFL

2014 Fantasy Football: Rankings, list of top NFL…

2014 Fantasy Football: Rankings, list of top NFL tight ends (TE)

MLB

MLB Power Rankings: Angels supplant A's, Nationals climb

MLB Power Rankings: Angels supplant A's, Nationals climb

NFL

David Wilson returns to triple jump, sets sights…

Giants fans know David Wilson can jump. They are just more used to seeing him go for backflips, not distance.

Style

11 timeless gifts for registries or just because

Gifts to prove you're a style maven once and for all.

Parenting

How everyday moments can inspire kids' creativity

"The Artist's Way for Parents" author Julia Cameron gives advice on how parents and children can be creative together.

Tech

How to stay safe online

Stop worrying about keeping your online passwords safe, and start worrying about keeping your username a secret. Actually, worry about both. According to Shaun Murphy…

Tech

OpenTable now lets you pay your bill via…

The restaurant app OpenTable added the ability to pay your bill (and tip) with your phone, thus cutting back on a few dining annoyances.