27 July 2018: Twitter follows Facebook off a cliff
One day after Facebook's record drop, Twitter shares plunged roughly a fifth after it reported a decline in monthly users, partly because it was purging fake and spam accounts. Cleaning up the platform was arguably good for the long run, but investors had been valuing it on user counts. A rough week for social media stocks got rougher. Metrics that companies emphasize can turn on them very quickly.
The lesson: Know which metric a stock is valued on, because that number can turn against you fast.
What it meant for investors
$1,000 in Twitter at the start of 2018 → $2,258 today, vs $2,519 in the S&P 500.
We start the clock at the start of 2018, the year it happened. That is 2.3 times the money, but $260 less than a plain index fund made over the same years.
What Twitter teaches: Merger contracts matter; Twitter shareholders were paid a premium largely because the company's lawyers had written a deal that the buyer could not easily escape.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2015 | $36.00 | $1,506 | $3,301 |
| 2018 | $24.00 | $2,258 | $2,519 |
| 2020 | $32.00 | $1,694 | $2,092 |
green = beat the S&P 500 · red = lost money
What if you bought Twitter? Every starting year and the full story →
More Twitter history
- 21 March 2006: Jack Dorsey sends the first tweet
- 15 July 2006: Twitter opens to the public
- 6 November 2013: Twitter prices its IPO at $26
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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