Tweet This: Avoid Twitter

 | Nov 07, 2013 | 2:30 PM EST
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Social media. We love it. We hate it. But we all agree on one thing: It's here to stay and we can't escape it. So, with the latest social media company now public, what reason could I possibly have for not snatching up shares of Twitter (TWTR) immediately? Well, social media itself, for one thing.

News of Twitter's initial public offering quickly went viral and social media lovers who have since seen Facebook (FB) break $50 and LinkedIn (LNKD) test $250 are eager to jump at Twitter's prospects. When everyone knows a name, however, who is left to keep buying? As Facebook and LinkedIn both saw with their own IPOS, the answer to that question has been almost no one.

Twitter may be been cutting edge when it comes to innovative ways to keep us informed, but keep in mind that on Wall Street it's still the new kid on the block. Many blame the Nasdaq and its order delays for Facebook's less-than-glamorous IPO last year, but at the time, orders aside, I wasn't excited about Facebook either. Why? It was missing a key ingredient: Reassurance that it could transition smoothly to the public arena. It took Facebook over a year and some major user interface changes to get that point across. What tricks does Twitter have up its sleeves? So far, I haven't heard of any.

Keep in mind that Facebook wasn't the first company in social media to face this pressure: LinkedIn made its debut in early 2011. It also went through a trial by fire and spent a year and a half proving itself before it managed to break its IPO highs.

If LinkedIn and Facebook both spent their first year in public just getting off the ground, what incentive do I have to think Twitter may be any different? Right now, it's hard to find any other than the fact that both Facebook and LinkedIn are now higher than where they started. But is this enough for real investors to climb on board at these levels? Do I want to just sit around in a stock and hope that it can get off the ground more quickly than its peers?

Twitter was priced at $26 per share ahead of the IPO. It came in $45.10 instead and quickly rallied another five points before retracing to $44. Since then, it's been stuck. This rapid ascent and retracement are immediate concerns. Strong IPOs tend to stay strong and while they may congest for a few days to a few weeks, the opening day's gains help propel it further. So far, Twitter can't even manage that. There are other reasons I have for holding off on TWTR at this time, but for now, these alone are enough.

Will Twitter catch my eye in several months or even a year? Perhaps. For now, however, as an investor, I'm standing aside.

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