[Rimpinths]

I think it's a bad sign when you see a company as dramatically overvalued as Twitter is. The primary function of stock markets is capital allocation, i.e. directing capital to companies that can provides the greatest return. When you see an IPO like TWTR today, that's not a sign of rational and efficient capital allocation; it's a sign of speculation gone wild.

Why is this bad? It can cause a couple of negative effects:

(1) Good companies that deserve the attention of investors may be starved of capital while billions of dollars gets directed to flashy overvalued companies.

(2) If it turns out to be another bubble, investors will feel burned and they'll become more risk adverse in the future. Investors will be reluctant to provide capital to companies that can make good use of it.

Twitter just made more money from selling stock than they have ever earned in revenue in their lifetime. Something is seriously wrong when companies start making more money from selling stock than they do from selling products or services.