Twitter recently started selling additional shares on the secondary market at a valuation of nearly $10 billion.
But David Hornik of August Capital writes on his blog, VentureBlog, that the people buying those shares are acting stupid.
“I have heard of short term memory, but this borders on amnesia,” Hornik writes. “Were the buyers in this latest secondary transaction (Twitter at $10B) asleep during the Facebook IPO?”
Hornik says that the buying behaviour in the secondary market doesn’t make sense, mostly because these buyers likely have limited knowledge of Twitter’s revenues, cost structure, and debt.
“I suspect that they, like many of the secondary buyers prior to Facebook’s IPO, Groupon’s IPO, Zynga’s IPO…are betting, not investing,” Hornik writes. […] “The secondary market stupidity continues.”