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

Florida man charged with murdering son to play…

A Florida man annoyed that his 16-month-old crying son was preventing him from playing video games suffocated the toddler, police said on Friday.

International

Powerful 7.2 magnitude earthquake rattles Mexico

A powerful earthquake struck Mexico Friday, shaking buildings and sending people running into the street, although there were no reports of major damage.

News

OMG! Exercise can make skin (and butt) look…

A moderate exercise regime can turn back time and actually reverse the skin's aging process, according to new research. The study showed that a minimum…

International

Jews in eastern Ukraine ordered to register, Kerry…

Secretary of State John Kerry condemned reports that Jews in eastern Ukraine had been ordered to register with the authorities "or suffer the consequences."

Entertainment

Whoopi Goldberg makes her debut as marijuana columnist

"It helps my head stop hurting, and with glaucoma your eyes ache, and she takes the ache out. It's wonderful," she said.

The Word

Kate Middleton made fun of Prince William's bald…

Kate Middleton and Prince William are in Sydney, Australia, right now, and it sounds like that brash Aussie sense of humor might be rubbing off.

The Word

Is Tom Cruise dating Laura Prepon?

"Mission: Impossible" star Cruise is said to be dating Laura Prepon, star of "Orange is the New Black."

Television

'Scandal' recap: Season 3, Episode 18, 'The Price…

Sally is Jesus, Olivia caused global warming, and Mellie's still drunk. Let's recap the Scandal finale. A church full of Washington insiders is about to…

NBA

Carmelo Anthony agonizing over Knicks future as season…

There’s still the cloud hanging over the franchise’s head as to the pending free-agent status of All-Star forward Carmelo Anthony.

NFL

Jets host players with eye toward NFL Draft

The Jets hosted a number of NFL Draft hopefuls for workouts on Thursday, with an eye toward some under-the-radar players.

NFL

Chris Johnson: I wanted to go to 'a…

Now that Chris Johnson is a Jet, the team has to figure out if one of the most explosive players in the NFL over the last half decade has anything…

NHL

Rangers' speed versus Flyers' size makes interesting playoff…

Among the myriad aspects that will make this Metropolitan Division semifinal series fascinating will be the battle between the Rangers' speed and the Flyers' size,…

Tech

VIDEO: 'Vein-scanning' may become the future of paying

Designed to make transactions quicker and easier, the technology works by scanning the unique vein patterns in each person's palm.

Tech

#FollowFriday: 10 of the smartest Twitter accounts

Spending lots of time on Twitter? You might as well learn something. Here are some of the smartest accounts to follow.

Style

Light-up nail art syncs with phone

This Japanese technology syncs light-up nail art with your phone.

Wellbeing

Why is dance cardio taking off in NYC?

Instructors at some of the city's hottest classes explain why.