Twitter Shares Sink 18 Percent as Lockup Expires

The company's stock price has been halved so far this year, wiping out about $18 billion in value.

Shares of Twitter plunged 18 percent Tuesday as a lockup period ended, allowing early investors and employees to sell millions of shares, thus driving down the price of the stock.

Twitter stock, in fact, has been sinking in preparation for the end to the lockup period, which was in place for six months following the company's IPO, and also because of disappointing user metrics announced late last month.

The stock is down 50 percent this year, which has cost the company $18 billion in market capitalization.

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On Tuesday, the stock fell $6.90 to $31.85, its lowest price since its $26 IPO last year.

The lockup period that ended this week applied to some 470 million shares, and 130 million changed hands Tuesday, amounting to trading volume that was about 10 times the norm for Twitter.

Many of Twitter's largest investors, such as Benchmark, Rizvi Traverse and Lowercase Capital, said they'd not be selling shares into the swoon, as did CEO Dick Costolo and co-founders Jack Dorsey and Evan Williams, though plenty of smaller shareholders probably took profits this week.

According to the Wall Street Journal, Twitter's stock-based compensation expense is equal to a staggering 50 percent of its sales in the first quarter, compared with 11 percent for Facebook. This means many employees who have been compensated with shares instead of cash may have jumped at their first opportunity to sell.

Twitter said last month that its monthly active users was 255 million in the most recent quarter, representing disappointing quarterly consecutive growth of just 5.8 percent.