How to Buy Stock in Twitter
By Joy Uyeno
Once upon a time, only birds outside tweeted. Today, the whole world is tweeting, thanks to the social networking community known as Twitter.com. Everyone from your teenaged son to Senators to journalists are using Twitter to update the world on what's going on in their lives. Who wouldn't want to invest in something that has become a way of life for many? However, Twitter is currently privately-held, meaning that its stocks aren't available to the public. Does this pique your interest even more? There are some strategies to get your paws on Twitter shares even before it goes public.
Check into the websites SharesPost.com and SecondMarket.com. These companies have recently emerged as private stock exchanges for members of private companies who want to sell some of their shares before going public. According to Fox News, "These exchanges give stakeholders an alternative way to trade their shares in hot startups like Facebook for cold, hard cash --- without having to wait years for an IPO." Some private companies give their employees shares in order to compensate for an initial inability to pay higher salaries. This option gives those employees a way to see some money more quickly (See References 1).
Do your research on the trends of this type of stock. Will Twitter continue to take off or is it a trend that will soon fade away? It's particularly important to carefully weigh your options if you're considering buying Twitter shares before they go public, since buying through private stock exchanges means buying whole blocks at once. Writer MHB for TheDomains.com explains, "I'm talking about 60,000 shares at $31 a share comes to an almost $1.9 million dollar investment; no small amount of change." In other words, if you want to buy stock in Twitter before it goes public, you should be confident in your investment (See References 2).
Register with one of the private stock exchanges. Once you create a profile, you'll be able to see how much other people have paid for shares of Twitter and other privately-owned stocks. Most of these companies also provide you with a report on the company and their current value. It's important to remember that you won't be able to sell your shares until the company goes public, which means you may be sitting on these shares for months or years, in which time the market may shift. "You might therefore be buying restricted stock for the same price or less than free trading stock is selling for once the company goes public.On the other hand, if you find a hot startup, and get in early, you might make a huge pop down the line if you have the cash to tie up for a while," says MHB of TheDomains.com. Since the investment is so big, it's important to discuss your decisions with financial advisors before moving forward with the purchase of a block of stocks (See References 2).
- Be aware that the stock market fluctuates daily, and buying privately owned shares means that you could be waiting months or even years before you're able to cash in on them.
Joy Uyeno has been writing about travel, food, fashion, culture and finance since 2005. For three years she wrote a column for the "Honolulu Star-Bulletin" aimed at young and first-time travelers. Her writing has appeared in several local and national publications, including the 2008 anthology "Honolulu Stories." She holds a Master of Arts in writing and publishing from Emerson College.