So, Twitter’s initial public offering was $26/share in November. Today, as of this writing, it’s $57.82. That’s pretty good if you bought some. Like many other companies before it, Twitter might make some people rich, or poor. It’s a gamble. It’s risky. Given the volatile world of the stock market, not to mention to volatile economy right now, people may not want to use any of their discretionary money to buy stock. But on the other hand, some people will cut back in other areas so they’ll have enough money to buy stock. If you had bought just 20 shares at the $26/share amount, you’d have profited just a little more than $600 already in just 2 ½ month’s time. I’m not one who would advocate anybody dumping a lot of money into the uncertainty of the market, even though I dropped some myself to get in on the Twitter band wagon. But with the right opportunity, the market can be very lucrative.
Lots of companies have thrived over the years, and if you get in at the right time, you can make a fortune. But you have to be shrewd and pay attention constantly. Consider companies like Enron, EF Hutton, Chi-Chi’s, Ames (formerly Zayre), Montgomery Wards, Hechinger, and Crown Books, among many others. Some of these companies you might think, “Never heard of them.” Or maybe you have heard of them but not in a very long time. That’s because they’ve gone out of business. Just imagine how investors felt, most of whom never recovered their investments, when these companies flopped?
It’s really hard to predict if a company will fold. Some companies fold due to greed (EF Hutton and Enron). Others might fold because of the economy (Ames and Montgomery Wards). Even feuds within the family can lead to some businesses folding, or closing most of its stores (Crown Books). Chi-Chi’s closed due to the aftermath of a hepatitis-A outbreak linked to the restaurant chain that killed several people and making nearly 9,000 people sick – some of whom had irreparable liver damage. The restaurant’s reputation suffered and it never recovered.
So you see, any number of things can cause a business to close. It’s a risk you take when you invest. When you get screwed, it’s a really bad screw. But on the flip side, when your investment pays off, it can provide immeasurable, wonderful results. Twitter has done well, slightly better than analysts initially predicted, and it has continued to do well. I wonder if it will last. I bet they asked the same question with Apple and Microsoft in the beginning, and they’re still going strong.