Shares of Twitter went on sale to the public for the first time Thursday, instantly leaping more than 70 percent above their offering price in a dazzling debut that exceeded even Wall Street's lofty expectations for the most anticipated initial public offering since Facebook last year.
At the opening bell, the social network that changed the way people communicate and share information worldwide was valued at $31 billion — more than Macy's and roughly comparable to the parent company of KFC and Pizza Hut or tractor and tool maker Deere & Co.
Twitter, which has never turned a profit in the seven years since it was founded, worked hard to temper expectations ahead of the IPO, but all that was swiftly forgotten with the stock's opening surge.
The company “now just has to deliver on all this,” said Roger Entner of Recon Analytics.
The IPO was carefully orchestrated to avoid the glitches and eventual letdown that surrounded Facebook's first appearance on the Nasdaq 18 months ago.
Trading on the New York Stock Exchange under the symbol “TWTR,” Twitter shares opened at $45.10, 73 percent above their initial offering price.
In the first few hours, the stock jumped as high as $50.09. At midday, it was up 73.6 percent, at $45.14, amid a broader market decline.
The narrow price range indicated that people felt it was “pretty fairly priced,” said JJ Kinahan, chief strategist at TD Ameritrade.
The immediate price spike “clearly shows that demand exceeds the supply of shares,” said Wedbush analyst Michael Pachter.
Earlier in the day, Twitter gave select users rather than executives the opportunity to ring the NYSE's opening bell. The users included actor Patrick Stewart, who played Captain Jean-Luc Picard in “Star Trek: The Next Generation”; Vivienne Harr, a 9-year-old girl who ran a lemonade stand for a year to raise money to end child slavery; and Cheryl Fiandaca of the Boston Police Department.
Twitter raised $1.8 billion Wednesday night when it sold 70 million shares at $26 each. Had it priced the stock at $30, for instance, the company would have taken away $2.1 billion. At $35, it would have reaped nearly $2.5 billion.
“In hindsight, when you look at this, you almost think they left a little too much money on the table,” Entner said.
At $26 per share, Twitter was valued at more than $18 billion based on its outstanding stock, options and restricted stock expected to be available after the IPO. That was less than a quarter of Facebook Inc.'s value of $104 billion at the time of its IPO.
Named after the sound of a chirping bird, Twitter got its start in 2006 after its founders discussed creating a service that would let users exchange short messages.
Since then, the site that lets users send short messages in 140-character bursts has attracted world leaders, religious icons and celebrities, along with CEOs, businesses and countless marketers and self-promoters.
The company tried to avoid the trouble that plagued Facebook's high-profile debut, which was marred by technical glitches. As a result, the Securities and Exchange Commission fined Nasdaq $10 million, the largest ever levied against an exchange.
The clumsy debut had lasting consequences for Facebook, which closed just 23 cents above its $38 IPO price on that first trading day and later fell much lower. The stock needed more than a year to climb above $38.
Those problems likely led Twitter to the NYSE.
As of midday Thursday, Twitter trading had “gone on pretty flawlessly,” Kinahan said.
Other tech stocks were down, with Facebook Inc. sliding $1.02, or 2.1 percent, to $48.10.
Still, $18 billion is a lofty valuation for Twitter compared with its peers. At its IPO price, Twitter valued at roughly 28 times its projected 2013 revenue — $650 million based on its current growth rate. In comparison, Facebook trades at about 16 times its projected 2013 revenue, according to analyst forecasts from FactSet.
Google Inc. meanwhile, is trading at about 7 times its net revenue, the figure Wall Street follows that excludes ad commissions.
Research firm Outsell Inc. puts Twitter's fundamental value at about half of the IPO price, says analyst Ken Doctor. That figure is based on factors such as revenue and revenue growth.
“That's not unusual,” Doctor says. “Especially for tech companies. You are betting on a big future.”
One of Twitter's biggest challenges as a newly public company will be to generate more revenue outside the U.S.
More than three-quarters of Twitter's 232 million users are outside the U.S. But only 26 percent of Twitter's revenue comes from abroad. The company has said that it plans to hire more sales representatives in countries such as Australia, Brazil and Ireland.
Twitter shares enter a frothy market. The Dow Jones industrial average closed Wednesday at a record high, up 128 points, or 0.8 percent, to 15,746. The Standard & Poor's 500 index rose seven points, or 0.4 percent, to 1,770, just one point below its own all-time high.