Twitter Stock (TWTR) Dropped $1 During Site Outage

By Susanna Kim March 11, 2014

(Credit: Leon Neal/AFP/Getty Images)

Shares of Twitter (NYSE: TWTR) dropped about a dollar around the time the social media site was "down for maintenance," but larger factors will be affecting the stock for the long haul, according to analysts.

Twitter stock was trading around $55.40 around 2 p.m. EST then as news of the site outage spread, Twitter's support handle tweeted that the problem was fixed. "Most users were impacted by a service outage when accessing Twitter via web and mobile apps. Service is restored," the company tweeted 2:47 p.m.

Shares of Twitter, which went public on Nov. 7, 2013, were $54.02 at the close of trading in New York.

Tony Wible, managing director of Janney Montgomery Scott, said investors continue to fear Twitter's execution of its business.

"The company's barriers are not as robust as those of Facebook and cannot afford to lose confidence with Wall Street," Wible said.

Max Wolff, chief economist with Citizen.VC, called the intra-day drop in share price a minor blip.

"Those things fade out very fast," he said. "A multi-day outage is a different story."

Shares of Twitter have fluctuated since the company revealed it paid $36 million earlier this week for 900 patents to avoid potential litigation from IBM.

But Wolff warned that shares of name-brand tech companies like Facebook and Twitter may be affected by the large number of consumer-facing IPOs this year, including Spotify, which reportedly is preparing to go public, and Coupons.com, which went public Friday.

Companies like Twitter have "high-flying names with big multiples," Wolff said. In other words, he said Twitter has a "bright future," but its financial metrics show a high stock price for a company that is still not making loads of money quite yet.

In its first earnings report last month, the company said it earned $242.7 million in revenue in its fourth quarter while it recorded a net loss of $511 million.

"The enormous success of the Twitter IPO and the general excitement around it are making a lot of people rush to the market," Wolff said. "All of a sudden, a lot of big tech companies are out there."