Twitter IPO: To invest or not to invest?

It’s official. The bird began trading on Wall Street last week with its IPO surging over 70% bringing the company’s value to more than $25 billion. According to Wall Street’s valuation, each Twitter user is worth around $110. At its peak, shares were trading at 45.8 times revenue over the past 12 months (compared to Facebook’s IPO which debuted at 26 times revenue). Even at its IPO price of $26 a share, Twitter was branded the most expensive IPO in U.S. history relative to revenue. Now that retail investors can purchase the stock, should they? I believe there’s great potential for investors to purchase the hype and get burned. A stock makes a good investment if its fundamental characteristics look promising. One of the most basic criteria to consider is a stock’s price to earnings ratio. Twitter’s stock appears overpriced by many conventional measures. Its price can only be justified if the company is a rare runaway success. It’s also important to consider a company’s business model. Twitter doesn’t currently turn a profit and hasn’t since it started in 2006. How will it make money in the future? Simply put, Twitter needs to turn targeted ads, especially mobile, into a