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TWTR

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Re: TWTR

#181

Post by hyperpape »

pfortuny wrote: post #139
hyperpape wrote: post #97

Earlier quoted context omitted.

Well, two days ago, they owned n shares of assets that were sellable for $46 a share. Now they have n * 26. They lost out, just as if I took your $20k new car and gave you $10k, you'd have lost out even though you have more cash.

Did that information exist two days ago? Because if it did not exist, then there was no real $46 value. No REAL market (which is the place where information on value is) implies no monetary value (or a worthless one). What happens is that they did not guess (and this is an important term, there is no inherent value in a guess) TODAY'S market's expectations correctly. But that has little to do with true monetary loss…

"REAL". I think it's a lot less clear what that means in this context than you apparently do.

Re: TWTR

#182

Post by 6cxs2hd6 »

jedberg wrote: post #5

I have to admit I was wrong. I assumed it would flatline like FB. Congrats to the Twitter team!

Congrats to the bankers pricing the IPO low enough.

Re: TWTR

#183

Post by olefoo »

nine_k wrote: post #164
tobyjsullivan wrote: post #147

Earlier quoted context omitted.

When you say "Joe Public" you make it sound like the stock is being bought with our tax dollars. Anybody who buys TWTR is making an informed decision and expects Twitter to do very well. It's hard to imagine Twitter today eventually being worth the current market cap of $25B. However, take a look at Google as a prime example of success. When GOOG first hit the market in 2004 it got a market cap of $23B. It was somewh…

Google had a solid, well-working monetization mechanism: AdWords, released in 2000, 4 years before the IPO. It was easy to see how it performs financially and why it might skyrocket. Can someone enlighten me how Twitter might earn some steady money?

Yes.

Think about all of the paywalled news outlets out there. Think about how many journalists tweet their stories to drive their personal brand. Think about immensely popular twitter accounts and sought after domain experts. Think about the fact that someone who is very entertaining on twitter needs to leave twitter to ( consult, sell t-shirts, produce media, etc. ) if they want to make money. Think about how t.co makes it possible for them to track url usage attributable to them.

Remember when micropayments for media was a buzzword?

If you still don't get why twitter might be undervalued. I would be happy to to explain it to you with, charts, graphs and a full research report; for a fee.

Re: TWTR

#184

Post by potatolicious »

brymaster wrote: post #124
nonchalance wrote: post #113

Earlier quoted context omitted.

The simple answer is that a share price is the present price to pay for the future cash flows of the company. Just because they aren't making money now doesn't mean that will always be the case. If twitter starts making billions of dollars soon, and starts paying that out to investors, then everyone makes money. They "eventually foot the bill" if twitter doesn't make money. Your cynicism reflects the fact that many c…

> Just because they aren't making money now doesn't mean that will always be the case. This is dangerous speculation.

It is dangerous, that's the whole point. Investors are expecting high returns - this is not exactly a slow-growth stock, and they've taken a commensurately high risk in exchange.

Re: TWTR

#185

Post by corford »

jonknee wrote: post #170
corford wrote: post #82

Can someone with more clue please tell me that the following cynical thought I keep having is wrong and laughably misinformed (and then explain why)? Twitter's investors (who have plowed hundreds of millions in to a loss making company) decide to sell some of their stock at $26/share (after consulting with banks to arrive at this price). This will make right the losses they've experienced so far and pass the problem…

Only a small percentage of TWTR shares were up for sale in the IPO--there are 544.70M total shares and just 70M were part of the IPO (a little less than 13%). Unless I missed something the shares sold in the IPO were issued, so for example if you were a VC with a million shares of TWTR you would still have a million shares of TWTR (now valued at $45M). The money from the sale will go to Twitter, not an investor. Twit…

Ahh now that's the sort of info I was hoping someone would reply with. So the shares that made up the IPO offering came from newly issued stock, not from existing share holders?

That makes it all a bit less cynical to me since all it means now is that the investors are worth more on paper. They still have to actually sell some of their shares at some point to realise any profit and presumably it's not easy for them to sell large quantities quickly (i.e. they're in this for the longish haul and thus far haven't covered their losses to date with actual bankable money)?

Would have been better in my book if they'd have waited until twitter at least turned a profit before going for the IPO but then I guess why wait if you're only plausible exit is IPOing and the banks are telling you the market will support it.

Re: TWTR

#186

Post by Spooky23 »

nine_k wrote: post #164
tobyjsullivan wrote: post #147

Earlier quoted context omitted.

When you say "Joe Public" you make it sound like the stock is being bought with our tax dollars. Anybody who buys TWTR is making an informed decision and expects Twitter to do very well. It's hard to imagine Twitter today eventually being worth the current market cap of $25B. However, take a look at Google as a prime example of success. When GOOG first hit the market in 2004 it got a market cap of $23B. It was somewh…

Google had a solid, well-working monetization mechanism: AdWords, released in 2000, 4 years before the IPO. It was easy to see how it performs financially and why it might skyrocket. Can someone enlighten me how Twitter might earn some steady money?

Partnerships with TV networks seem to be the big thing now. I guess lots of people cozy up to their iPad and post reactions to TV shows in real time on Twitter with hashtags -- driving live viewing of TV, watching of ads and giving marketers another way of delivering coordinated mesages to people.

Re: TWTR

#187

Post by clarky07 »

nine_k wrote: post #158
clarky07 wrote: post #114

Earlier quoted context omitted.

Not really. not only did those companies not have profits, they also didn't have any revenues or users. Twitter has > 200 million users, and they are growing revenue 100% a year. Dot-com boom was a whole different animal.

Let's calculate. Twitter revenue was $391M for last 4 quarters [1]. Twitter market cap is currently $24670M, or about 63 times the revenue. If Twitter's revenue grows 100% each year (that is, twice each year), it will take 5 years for them to catch their current market cap with revenue : 1 + 2 + 4 + ... + 32 = 63. But what investors are interested in is not revenue, it's profit. Let's imagine that Twitter discovers a…

I didn't say anything as to whether Twitter was over or undervalued, just that it was significantly different than the dot com boom. Hundreds of millions in users and hundreds of millions in revenue is decidedly different than very few users and no revenue.

As for your numbers, there is no reason that a company needs to match their valuation with revenue each. That would likely be extremely undervalued. Apple had 170 billion revenue in the last 12 months and a market cap of 465 billion that many people think is undervalued. 63x is excessive, but 1x is silly.

>But what investors are interested in is not revenue That's not always true. See AMZN

Profit is what I am interested in, and it is what a lot of people are interested though. Why are we comparing it to Apple, a hardware company with huge costs? It makes a lot more sense to compare to Facebook, which enjoys 50% margins. Also, why are we expecting it to have profits = to market cap? Really, 1x pe? Market average is ~15, with lots of companies being higher.

If, in 7 years Twitter has profit = to it's current market cap, it is an absolute steal at this price. Like unfathomably good deal. I'm not convinced they will keep growing revenue at 100%, certainly not for 7 years, but I am convinced that they will become profitable due to their low cost structure. I wouldn't be surprised to see 50% margins.

Re: TWTR

#188

Post by pbreit »

corford wrote: post #82

Can someone with more clue please tell me that the following cynical thought I keep having is wrong and laughably misinformed (and then explain why)? Twitter's investors (who have plowed hundreds of millions in to a loss making company) decide to sell some of their stock at $26/share (after consulting with banks to arrive at this price). This will make right the losses they've experienced so far and pass the problem…

Hard to determine which part your most concerned about. When $25b of wealth is being created, there are going to be some folks making money. And you might not think some of those folks earned their take.

First, you're too fixated on "loss-making". IPO companies are almost by definition loss-making. IPOs are fundraising events. Growth companies use money to invest in the business for growth, not profits (yet).

Second, it's rare for early investors to cash out on the IPO (Facebook was an exception). Instead, they usually wait for a secondary or for the lockup expiration.

Third, yes, there is frequently an artificial "pop" on the day of the IPO because of the pent-up demand but that usually tempers quickly. Investors should definitely be careful and know what they are getting into. If they bought into Yelp, LinkedIn or even Facebook at the popped price and hung on as long term (read: every) investors should, they are doing fine.

Fourth, yeah, the investment banks get to dole out typically underpriced shares to their top clients. Get over it.

Fifth, the banks do take on some risks. Facebook IPO presented the banks with considerable risk of loss depending on when the banks were able to unwind their positions.

Sixth, the pre-IPO market has evolved such that a lot of people who want in are getting in prior to the IPO.

Feeling cynical might be fun but isn't very attractive or lucrative.

Re: TWTR

#189

Post by yummyfajitas »

NickM wrote: post #167
yummyfajitas wrote: post #91

Earlier quoted context omitted.

What does it mean for a market to be "highly irrational"? Normally the term "irrational" is applied to actors, while "efficient" refers to markets. Are you suggesting markets are not efficient? In that case, when can we expect you to become extremely wealthy from your inefficiency-proving strategy? (Claiming the EMH is false is equivalent to claiming that such a strategy exists.) Incidentally, when an actor behaves i…

Are you suggesting markets are not efficient? In that case, when can we expect you to become extremely wealthy from your inefficiency-proving strategy? (Claiming the EMH is false is equivalent to claiming that such a strategy exists.) What if I were able to prove that markets are inefficient because efficiently pricing securities is an NP-complete problem? Well, sure, maybe a strategy exists, but if it requires solvi…

Yes, David Pennock has had these results for a while. The economist would merely argue that results which are computationally intractible are equivalent to information which does not exist. And the computer scientist would point out this doesn't mean markets can't approximate efficient with a high degree of accuracy.

Re: TWTR

#190

Post by dangero »

SCAQTony wrote: post #149

Facebook, Twitter, Linkedin...Sometimes I think the NASDAQ is looking more like the "Fine Art" auction market rather than an actual stock market.

Twitter isn't on NASDAQ. It's on NYSE.
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