It worked really really well for Groupon. (Well for their key stockholders at least). But this is the key ...
As a potential investor, those factors make me shy away from these investments as it makes the stock more volatile to changes and puts the fate of the stock in a few large holders hands.
Good, you're being smart about it. Not everyone will be, there will be a number of people who say "Gee, Twitter is everywhere this is going to be a huge stock some day." and will jump in with both feet. Betting with their feelings rather than an analysis of the fundamentals. For someone to 'win big' you either need someone to 'lose big' or a lot of people to 'lose somewhat.' Once there is enough float for the market to balance out the real expectation of the company will emerge (positive or negative).
As a potential investor I think buying it at $10 is probably reasonable and re-selling when it gets back to $20.
As a potential investor, those factors make me shy away from these investments as it makes the stock more volatile to changes and puts the fate of the stock in a few large holders hands.
Good, you're being smart about it. Not everyone will be, there will be a number of people who say "Gee, Twitter is everywhere this is going to be a huge stock some day." and will jump in with both feet. Betting with their feelings rather than an analysis of the fundamentals. For someone to 'win big' you either need someone to 'lose big' or a lot of people to 'lose somewhat.' Once there is enough float for the market to balance out the real expectation of the company will emerge (positive or negative).
As a potential investor I think buying it at $10 is probably reasonable and re-selling when it gets back to $20.