Do Pre-IPO Twitter Stock Price Swings Mean The Momentum is Fading?

By Tom Johansmeyer Comment

It hasn’t even been a month since the last Twitter auction on SharesPost, but demand is still obvious. Investors remain hungry for a piece of the still-private social media company. This time around, they committed more than $2 million in capital to own a chunk of this business that just might be worth as much as $10 billion.

The recent SharesPost auction, which closed on March 28, 2011, is characterized by a bit of up and down.

What was up? Well, that would be the trading volume. At the beginning of March, SharesPost helped shareholders move 35,000 shares of common stock in Twitter. Earlier this week, trading volume was twice as high, according to a SharesPost statement revealed to SocialTimes, reaching 70,000.

What was down? The share price.

Despite being oversubscribed, the clearing price reported by SharesPost was only $32. While this is a decline of $2.50 from the beginning of the month, it still represents a fairly steady valuation by the SharesPost investing community (my opinion), and the increased trading volume likely relieved some price pressure.

Does this mean that Twitter is losing momentum?

The reality is that there will be small price swings in a relatively illiquid, pre-IPO stock, and the doubling of shares moved in this auction shows that there is appetite at a generally consistent price. The real story won’t come out until an IPO … if Twitter decides to take that route.