Twitter closed out regular trading this afternoon at $30.50 per share. That’s its lowest end-of-day tally yet in its history as a public company. The company traded below the $30 mark earlier this month, but managed to end May 7 at $30.66.
The decline of Twitter’s value is impressive. The company ‘s 52-week high — it hasn’t been public that long, keep in mind — is $74.73. Its 52-week low — same caveat — is $29.51. So it closed regular trading today ahead of its All Time Low, but still at a fresh low for that timing.
How does this impact you? The answer is somewhat simple, as TechCrunch recently reported in the face of a decline in the price of technology stocks:
The fall in value of so-called “momentum” technology stocks lowers the implied valuation at which other, still-private technology companies can go public. The less that Weibo is worth, the less, implicitly, valuable analougous firms are that haven’t gone public — their private valuation may be static due to a lack of liquidity, and a recent but past equity sale, but that doesn’t shift the decline in their potential market value.
My favorite venture capitalist likes to say that the venture capital market is just the NASDAQ on steroids, and he has a point. And at the moment the NASDAQ is taking a pause.
The gist here is that the decline in the value of currently public technology stocks lowers the implicit value of private technology companies — the firms that are incredibly illiquid and are owned by a host of founders, investors, employees, and, of course, family members. A decline in that asset pool could therefore impact everything from rent in San Francisco to the price of homes in Sunnyvale.
So this trickles down in the Reagan sense.
Why cover Twitter foibles like this decline? Simple: Twitter matters as it’s a recently public technology that isn’t valued on its ability to generate GAAP profits. Sound familiar? Precisely.
IMAGE BY FLICKR USER ED SCHIPUL UNDER CC BY-SA 2.0 LICENSE (IMAGE HAS BEEN CROPPED)