Tomahawk, WI 11/13/2013 (BasicsMedia) – Share of the newly IPOed real-time social media company Twitter Inc. (NYSE:TWTR) will not be available for sale immediately. In doing this, the company has adopted the more conservative practice of longer lock-up period. So what does this mean for investors?

There is so much that surrounds share lock-up duration. While most listed companies these days choose shorter lock-up periods, the norm has been longer hold periods running into 180 days or more. TWTR in this case has settled for 181 days lock-up duration. This means that investors who acquired the stock last week at $26 a piece and which are now currently trading around $42 a piece will not be able to sell their holdings until around May 6, 2014.

So the question may be, is longer lock-up period better than shorter lock-up period? When shares are locked-up longer, investor confidence is assured considering that there is no worry of insiders dumping the shares. In essence, longer lock-up duration helps to ease pressure on the stock. The earlier that TWTR shares will be available for sell will be Feb. 15, 2014 when executives will sell some 9.9 million shares, just around 1% of shares outstanding to cover income tax from the shares vesting.

Facebook, Google did it differently

A lot of variations can now the seen in how TWTR is conducting its business on the browser from how its archrival Facebook did it last year. TWTR did not only avoid the technical glitch that hit FB IPO by choosing a difference launch platform from the traditional tech IPO platform, also its shares have remained relatively higher for the length they have been traded since its listing. Moreover, TWTR’s lock-up period nearly doubles that of FB.

Following its troubled IPO, FB unlocked its 268 million shares in 91 days. This resulted in some sort of pressure on the stock, sending it down like a rock before peaking after more than a year of struggle. At least TWTR is now safe from stock pressure in this regards and the earned investor confidence is good enough for its future.

Another tech company which veered off the lock-up norm to allow early selling was Google after its IPO. The search engine’s early sell off started 15 days after its public listing allowing insiders to trade the shares. Other shareholders of the stock were able to sell their shares in 90 days. However, Google has been largely successful in containing pressure on its stock which now trades above $1,000 a piece.

Profit remains the problem

While TWTR has been able to avoid the stock pressure resulting from early sell of, and effectively winning the confidence of investors that insiders would not be dumping their holdings soon, the real headache for TWTR is turning profits. Unlike its rival FB, TWTR is yet to earn profit for its time in business. The pressure in its subscriber numbers is also a concern for concern for some investors.

Trading about $42 a share, TWTR’s market cap now stands at $19.80 billion.

DISCLAIMER: This content is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a real licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.