Why is this bad? It can cause a couple of negative effects:
(1) Good companies that deserve the attention of investors may be starved of capital while billions of dollars gets directed to flashy overvalued companies.
(2) If it turns out to be another bubble, investors will feel burned and they'll become more risk adverse in the future. Investors will be reluctant to provide capital to companies that can make good use of it.
Twitter just made more money from selling stock than they have ever earned in revenue in their lifetime. Something is seriously wrong when companies start making more money from selling stock than they do from selling products or services.
They IPO'd in mid-March 2000. The tech market almost immediately began collapsing the next day.
The founder used to give interviews during the so-called quiet period. A shareholder class action lawsuit argued the prospectus was false and misleading.
They sold to Nokia for $60 million in 2006. $60 million, not $1400 million.
I guess people remember the last time around when companies losing money instead of making money IPO'd.
On an individual level, it's hard to predict if Twitter will do well or not, but on a general level it's safe to say that companies large enough to IPO are generally safer when they're making money as opposed to losing money.
So the tech isn't interesting, nor is the business. The interesting part here is what people are willing to pay for it.
This IPO is going really well. The stock is being well received in the marketplace. I know twitter employees who just got rich are reading this, but can't comment due to SEC rules, so congrats Twitter peeps!