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Twitter Falls Below IPO Price as Concerns Mount Over CEO, Growth

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Re: Twitter Falls Below IPO Price as Concerns Mount Over CEO, Growth

#11

"At stake is whether Twitter [...] can become a mainstream platform instead of a niche forum favored by journalists and celebrities." I found that line interesting, because I often think of Twitter as a niche forum favored by technology workers and celebrities.

When I think of twitter I think nothing but mainstream. There are two platforms that anyone who is anyone (celebrity or business or politician) needs to have: either Facebook or Twitter. Niche is Instragram. Niche is Snapchat. But when Kardashian is on CNN once an hour because of a tweet, it's not niche. App.Net is niche. Twitter is the epitome of mainstream.

I think thats the main problem with Twitter, saturation. Its mainstream enough the regular people are not likely to jump on Twitter now if they already haven't.

Re: Twitter Falls Below IPO Price as Concerns Mount Over CEO, Growth

#12

Twitter was the first in a long list of current (i.e. post-2000) startups where I thought to myself, Really? That's a $X0 billion business? I wonder if this is just the tip of the iceberg.

Twitter had a Q1 revenue of $436 million. Doesn't it make it a $X0 billion business or am I missing something ?

The main concern to investors is primarily the growth and their ability to warrant a premium price on the stock.

Re: Twitter Falls Below IPO Price as Concerns Mount Over CEO, Growth

#13

"At stake is whether Twitter [...] can become a mainstream platform instead of a niche forum favored by journalists and celebrities." I found that line interesting, because I often think of Twitter as a niche forum favored by technology workers and celebrities.

When I think of twitter I think nothing but mainstream. There are two platforms that anyone who is anyone (celebrity or business or politician) needs to have: either Facebook or Twitter. Niche is Instragram. Niche is Snapchat. But when Kardashian is on CNN once an hour because of a tweet, it's not niche. App.Net is niche. Twitter is the epitome of mainstream.

Part of Twitter's challenge is that it's mainstream, but in a "write-only" way. Every celebrity, politician, religious leader, and journalist may be tweeting 24-7, but their followers aren't engaging in the same way they do on Facebook. A lot of users don't login, tweet, or spend much time on the site/app according to various reports.

Chris Sacca said a lot about this recently. http://lowercasecapital.com/2015/06/03/what-twitter-can-be-2...

Re: Twitter Falls Below IPO Price as Concerns Mount Over CEO, Growth

#14

Earlier quoted context omitted.

When I think of twitter I think nothing but mainstream. There are two platforms that anyone who is anyone (celebrity or business or politician) needs to have: either Facebook or Twitter. Niche is Instragram. Niche is Snapchat. But when Kardashian is on CNN once an hour because of a tweet, it's not niche. App.Net is niche. Twitter is the epitome of mainstream.

I think thats the main problem with Twitter, saturation. Its mainstream enough the regular people are not likely to jump on Twitter now if they already haven't.

This. Nobody who could conceivably make an account is just waiting to hear about this hot new thing called microblogging.

Re: Twitter Falls Below IPO Price as Concerns Mount Over CEO, Growth

#15

Everyone says it is all about growth. Twitter is not growing. Pretty simple story, really.

Their revenue is indeed growing, but, as you indicate, the company's valuation is not.

Because they are not profitable - everyone who defends startups who lose money have the same rationale - increase users now, at a loss, and turn it around later. Twitter is neither growing users nor turning it around.

Maybe they will come up with a new CEO and a new strategy... maybe not. But there is almost zero reason to hold their stock. There are better investments out there.

Re: Twitter Falls Below IPO Price as Concerns Mount Over CEO, Growth

#16

Twitter was the first in a long list of current (i.e. post-2000) startups where I thought to myself, Really? That's a $X0 billion business? I wonder if this is just the tip of the iceberg.

Their revenue exceeds 1bn per year so...yeah. They are a billion dollar company.

Re: Twitter Falls Below IPO Price as Concerns Mount Over CEO, Growth

#17

"At stake is whether Twitter [...] can become a mainstream platform instead of a niche forum favored by journalists and celebrities." I found that line interesting, because I often think of Twitter as a niche forum favored by technology workers and celebrities.

Yeah, or protesters and celebrities. It could actually be anyone and celebrities, because you only see the groups that you participate in, and the only one with global visibility are, duh, celebrities!

I think Twitter's biggest problem is lack of vision and a commitment to that vision. Going public was a big mistake for them, because Wall Street has no concept of what makes technology good or interesting over the long haul, they can only reduce things to the most simplistic metrics. Facebook is pretty much a known quantity at this point, and is the biggest social network that has ever existed. So now everyone wants to measure Twitter by the Facebook yardstick. But Facebook only has 5 times as many active users as Twitter, and I would bet money that the average Twitter user is more than 5 times as influential as the average Facebook user. If you can't build a viable company with 300M of the most influential users, then something is very very wrong in the world.

The biggest tell-tale for me is that everyone knows exactly what Facebook is, and many people (especially younger ones) see it as a crufty accumulation of old friends and family that they have no interest engaging with. But for Twitter there's still a majority of people who "don't get it", and yet it has been a revolution for celebrities and the aforementioned groups in terms of what it's done for the public conversation. To me this is all an indication that Twitter has way more upside than Facebook. In fact, I'd be willing to invest in Twitter if I thought their leadership was strong, but my big concern is that they don't have a clear vision, and therefore they will get picked apart by the clueless hand-wringing of Wall Street until they become so cheap that Google or Facebook snaps them up.

Re: Twitter Falls Below IPO Price as Concerns Mount Over CEO, Growth

#18
post #12

Twitter was the first in a long list of current (i.e. post-2000) startups where I thought to myself, Really? That's a $X0 billion business? I wonder if this is just the tip of the iceberg.

Twitter had a Q1 revenue of $436 million. Doesn't it make it a $X0 billion business or am I missing something ? The main concern to investors is primarily the growth and their ability to warrant a premium price on the stock.

Twitter is huge, it costs a lot of money to run. They had a net profit of negative $162.4 million Q1. I don't know what defines an $X0 billion business, but I would imagine that it would be profit.

Re: Twitter Falls Below IPO Price as Concerns Mount Over CEO, Growth

#20
post #12

Twitter was the first in a long list of current (i.e. post-2000) startups where I thought to myself, Really? That's a $X0 billion business? I wonder if this is just the tip of the iceberg.

Twitter had a Q1 revenue of $436 million. Doesn't it make it a $X0 billion business or am I missing something ? The main concern to investors is primarily the growth and their ability to warrant a premium price on the stock.

> Twitter had a Q1 revenue of $436 million

They're also consistently losing money. Even if you strip out half their capital expenditure or 3/4 of their R&D from their FY 2014 numbers, they would still lose money.

Let's say they can eventually run a 20% net income margin. This would turn their 2014 revenues into $280MM of earnings. Using the S&P 500's 21x P/E ratio, this values the business at $6bn. That's 70% less than their current market cap. And they don't appear close to running a positive margin, let alone 20%, on their 2014 numbers.

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