Dazzling Twitter debut sends stock soaring 73%

NEW YORK - 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 hopes.

By the closing bell, the social network that reinvented global communication in 140-character bursts was valued at $31 billion - nearly as much as Yahoo Inc., an Internet icon from another era, and just below Kraft Foods, the grocery conglomerate founded more than a century ago.

In Silicon Valley, the IPO produced another crop of millionaires and billionaires, some of whom are sure to fund a new generation of start-ups.

Twitter, which has not 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 when the market opened.

Still, most analysts don't expect the company to be profitable until 2015. Investors will be watching closely to see whether Twitter was worth the premium price.

The 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."

The most anticipated initial public offering of the year was carefully orchestrated to avoid the dysfunction that surrounded Facebook's debut.

Trading on the New York Stock Exchange under the symbol "TWTR," 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. Most of those gains held throughout the day, with Twitter closing at $44.90, despite a broader market decline.

Earlier in the day, Twitter gave a few 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 to select investors for $26 each. But the huge first-day pop left some analysts wondering whether the company could have raised more. Had Twitter 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. That's a lot for a company that has never made a profit and had revenue of just $317 million last year.

There's no doubt, of course, that Thursday's stock-price jump made a lot of Twitter stockholders happy - and if it stays this high, or goes even higher, they will keep grinning. But the money that these shareholders might make from any stock sale doesn't go to the company.

"Ultimately what you want is a nice pop," said Roger Entner of Recon Analytics. "Twitter now just has to deliver on all this."

Named after the sound of a chirping bird, Twitter's origins date to 2005, when creators Noah Glass and Evan Williams were trying to get people to sign up for Odeo, a podcasting service they created. Odeo didn't make it.

By early 2006, Glass and fellow Odeo programmer Jack Dorsey began work on a new project: teaming with coworker Christopher "Biz" Stone on a way to corral text messages typically sent over a phone.

It was Glass who came up with the original name Twttr. The two vowels were added later. The first tweets were sent March 21, 2006.