TWTR

Post by nkohari » Thu, Nov 07, 2013, 6:44 PM UTC

tedunangst wrote: post #134

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…

Note that GOOG hasn't actually paid out any of its cash flow to investors.

Post by nkohari » Thu, Nov 07, 2013, 6:47 PM UTC

oijaf888 wrote: post #161

brymaster wrote: post #121

Earlier quoted context omitted.

> borderline breach of fiduciary duty. That's not a real thing. http://skeptics.stackexchange.com/questions/8146/are-u-s-com...

"breach of fiduciary duty" is a very real thing. (29 USC § 1109 specifically) In this case it has nothing to do with the link you posted. He means the contract that Twitter signed with the banks probably has language that says they will attempt to get the best possible price for the shares. The resulting pop shows that they did not do that.

Post by makomk » Thu, Nov 07, 2013, 6:51 PM UTC

pachydermic wrote: post #65

generj wrote: post #40

Earlier quoted context omitted.

In this world of quant-bots, I don't know how anyone can argue that we have a fully rational market. My understanding is that much of the progress in economics has been merging economics with psychology to identify rational failures.

"Homo economicus" is still really important for macroeconomics. The reason for this is pretty simple: designing rich, large models is still hard to do and the practical limitations introduced by basing your assumptions on the idea that people act irrationally instead of rationally can make things too complicated to be of practical use. So in microeconomics or small models, people can practically accept and implement…

Post by tedunangst » Thu, Nov 07, 2013, 6:53 PM UTC

clarky07 wrote: post #153

corford wrote: post #143

Earlier quoted context omitted.

I find it hard to accept that a rational person thinks twitter will ever have the profit earning capability of Google. It just seems nuts to me to justify twitter's future earnings potential on a black swan event. Speculation on the other hand I can sort of understand and accept (although it's kind of sad that the speculation is driven entirely by hype rather than any kind of solid metrics).

It doesn't have to have the earning potential of Google to be successful. It's valuation is 1/10th of Google's.

Post by corford » Thu, Nov 07, 2013, 6:53 PM UTC

ChuckMcM wrote: post #198

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…

I think you fundamentally misunderstand the process but that is ok, its not all that straight forward. The transaction here is between risk takers (venture capitalists and investment banks) and risk pricers (people who buy stock). Nobody is getting "ripped off" as long as everyone is following the rules set down by the SEC. Investors put money at risk. You know that because you've been here on HN a couple of years an…