On November 7, 2013, Twitter released its initial public offering (IPO) priced at \$26 per share. When the day ended, it was priced at \$44.90, reportedly making about 1600 people into millionaires in a single day. [20] At the time it was considered a successful IPO. Four years later, Twitter is trading at around \$18 per share. Why do you think that occurred? Is Twitter profitable? How can you find out?

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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

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FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 14, Problem 4TP
Textbook Problem
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On November 7, 2013, Twitter released its initial public offering (IPO) priced at \$26 per share. When the day ended, it was priced at \$44.90, reportedly making about 1600 people into millionaires in a single day.[20] At the time it was considered a successful IPO. Four years later, Twitter is trading at around \$18 per share. Why do you think that occurred? Is Twitter profitable? How can you find out?

To determine

Introduction:

Initial public offering is a process wherein the company raises capital from the general public investors. In this process, the company offers its securities to the public the first time.

To state:

Reason of declining share price of T company. Also, state about profitability of the company.

Explanation of Solution

The share price of T was at the highest price on the ending of very first day. After four years, the price of share got declined. The reasons for the declining price were as follows:

• There were a smaller number of people active on the T company’s account. This made it less popular and negatively impacted the value of the company. It reduced the price of its share.
• T company found that most of the account logged in was fake. The company blocked those accounts thus reducing the number of followers on T company’s account. With reduced number of people, the value of the company got declined and resulted in less share price of company.
• The company got less advertising work. It affected the earning of the company in a negative way. Less dividend was distributed due to fewer earnings...

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