Social media websites are crucial, it can be argued, to business success if you work online. Now though social networking sites such as Facebook and Twitter are leaping onto the advertising bandwagon and selling shares but one investor jumped ship Friday.
66-year-old Reuben Kressel decided to invest in Twitter but Friday he sold his share in the online company, as he had promised he would do, following a market downgrade of the website.
Mr Kressel bought into the social media dream business when Twitter Inc. was on the rise. He bought 500 shares when the stock was priced at $52, reports the Wall Street Journal. From the start Kressel made it plain he was not investing for the long term unless the share price continued to rise.
The share price rose dramatically making Twitter Inc. a good investment. On Thursday the shares made good ground with a gain of almost 5%, however on Friday that changed.
Twitter Inc.'s high-flying stock has gone too far, too fast.
"That view comes courtesy of Macquarie Equities Research, which cut its rating on the microblogging site Friday morning to underperform from neutral, while maintaining its $46 price target. The catalyst for the firm’s downgrade is simple: Twitter hasn’t done anything to justify nearly tripling since last month’s IPO".
As soon as Reuben Kressel learned a downgrade was on the cards he sold his share of Twitter. “I sold out completely,” he told MoneyBeat Friday morning. “I made money on it and didn’t want to take any more chances.”
Investing in companies by purchasing shares is usually all about making money. Knowing just when to sell and when to buy is important. Hang on to shares too long and you could lose money. Sell at the right time and you should make money.
San Francisco company Twitter Inc. began selling shares in November and investors experienced some big gains, with a rise of 182% at one point.
Of course the big questions now are how far will the share price fall and will other investors bail out of Twitter?
The social media site, Twitter, attracted a huge range of investors and some were just looking for short term financial gains. Those with similar ideas to Mr Kressel may already be considering selling their shares for a quick financial gain.
For those who are still undecided perhaps Mr Kressel can offer some useful advice: “I’m better off taking my chips off the table than getting killed,” Mr. Kressel said. “You know what they say: ‘Don’t be a pig.’”