So you want to own a little piece of the social networking giant known as Twitter? Here’s a quick guide—and a few words of caution.
First off, let’s preface this how-to with an important point: Buying a single share of Twitter (or any stock) probably isn’t a good idea. Not as a pure investment anyway. Sure, the price of a share of Twitter surged on the day of its IPO. And yes, it makes sense for anyone hoping to build a nest egg to start investing sooner than later. But the formula for sound investing starts with a balanced, diversified portfolio of stocks, bonds, and mutual funds. Because of the unpredictability of the fate of any one company, as well as the market as a whole, investing in a single stock comes with an enormous amount of risk.
What’s more, while Twitter executives and stakeholders are sure to become very rich due to the IPO, no one will build a retirement fund by purchasing a single share of Twitter stock. For the sake of comparison, someone who bought one share of Facebook for $38 when it went public in the spring of 2012 had to watch as the price dipped to under $19 in late 2012, though that one share could now be sold for about $48.
That would seem to mean a profit of $10, which is a good return considering the initial investment was $38, but because of broker’s fees—typically $7 to $12 per transaction for the cheapest online brokers—it would amount to a net loss for anyone trying to “cash in” now. Because these charges are typically flat fees assessed to any trade, the smaller the investment is, the larger the impact on the investor’s bottom line. A $10 fee is a substantial amount when investment is just $45, the price of Twitter as of midday Thursday, but that same $10 fee seems negligible for someone investing, say, $5,000.
That said, it’s possible to make money even with a small investment. Looking back, any “investor” who purchased just a single share of Google during its initial public offering has done pretty well. Google had an IPO price of $85 in 2004, and a share has been trading lately for over $1,000. But that profit of around $900 has been nearly ten years in the making.
If you’re interested in buying a single share of Twitter for fun, as a goof, or perhaps even with the hopes of making some money, the first step to take is opening an account with a broker.
The beginner investment primers at Kiplinger and Money magazine will help you narrow down the options. Most likely, assuming you’re just getting started investing, a discount online broker such as Scottrade, etrade, or ShareBuilder makes sense. Their transaction fees are low—especially important for small-time investors—and accounts are generally quick and easy to set up. For certain kinds of accounts, however, a minimum balance is required, and depending on how you plan on funding the account and what kind of banking you do normally, the time required to open a new account with a broker could range from almost immediately to more than a week. It’s only then that you’d get to proudly purchase that one share of Twitter, at whatever the market rate is at the time.
Another company, called OneShare, specializes in selling single shares of stock for popular companies, as the name indicates. OneShare even sends customers a framed certificate of the stock being purchased. But the cost of this service is $39, which is almost what one share of Twitter was trading for when first introduced to the public. Besides, on the day of Twitter’s IPO, OneShare hadn’t yet begun offering shares of Twitter for sale.