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Twitter shares slammed as employee lockup period ends

Insiders, holding 470 million shares, can sell starting today. Big investors say they don't plan to bail anytime soon. Even so, the stock plummets 15 percent.

Twitter CEO Dick Costolo speaking in San Francisco earlier this year. Daniel Terdiman/CNET

Twitter shares, already under siege in the wake of a second-straight quarterly report of slowing user growth, are being slammed today as the official lockup period restricting insider sales of stock ended.

As of this writing, Twitter's stock stood at $32.86, down 15.20 percent since yesterday's close. That marks a new low for the shares, which went public in November at $26 and quickly skyrocketed to as high as $74.73.

But beginning with Twitter's February report of its fourth-quarter earnings, and continuing with last week's first-quarter report, Wall Street has been selling off shares as fast as possible over fears that the social-media company is not adding new users fast enough.

Now with the official lockup period ended, meaning most insiders can for the first time since the IPO sell their stock, investors appear worried that Twitter employees and other early investors will be flooding the market with shares. Some 470 million shares freed up Tuesday. However, Twitter co-founders Evan Williams and Jack Dorsey and CEO Dick Costolo, along with some big institutional investors, have said they have no immediate plans to sell their stock.

By comparison, when Facebook's lockup ended in November, 2012, 800 million shares were freed up, yet its stock rose by 13 percent, according to Reuters.

Twitter did not immediately respond to a CNET request for comment.

While Wall Street appears spooked by Twitter's inability to increase the pace of user growth, some analysts have said they think that investors simply misunderstood the nature of the social network from the get-go.

"The service by its nature addresses a much more narrow audience than the market believed it could," Hudson Square Partners analyst Daniel Ernst told CNET last week, "and I think the results of the last two quarters have helped underscore our thesis. They're not a (broad, mainstream service) like Facebook."

And a former Twitter senior executive told CNET at the time that he thinks the company probably could have done a better job communicating its mission to Wall Street (though he thinks current CEO Dick Costolo is still doing a good job).

"Wall Street isn't going to figure it out on their own," the former exec said.