TWTR - Twitter, Inc.

[Guest valueInv]

Regardless of the stock price, the IPO and the attention is great for the business.

Right now CMOs are calling their teams and asking how much they're spending on Twitter and why it is so low.

[wachtwoord]

For comparison, TWTR is currently valued at 3x the amount of Safeway, 2x Best Buy, 3X Sears, 2X Whirlpool, nearly 2x Paychex, and about the same as John Deere & Kraft, yet makes no profit.

 

 

This market is silly.

 

Which is why value investing exists. Cheers to that.

 

I wish everyone the best with their overpriced cash burner ;)

[dcollon]

Howard Marks on Twitter from Value Walk

 

http://www.valuewalk.com/2013/11/howard-marks-bloomberg-interview-twitter-ipo-bubbles-video/?utm_source=mailchimp&utm_medium=email&utm_campaign=EMAIL_DAILY

[Guest hellsten]

I heard they're making a documentary about Twitter:

[fareastwarriors]

Why Twitter's share price doesn't make sense

 

http://www.cnbc.com/id/101191870

[APG12]

Does the price make more sense now?  ;) I wouldn't be interested in TWTR at this price even if its revenue was net income.

[fareastwarriors]

http://www.nytimes.com/2013/12/30/business/rise-in-twitters-stock-reflects-exuberance-in-silicon-valley.html?ref=business

 

Rise in Twitter’s Stock Reflects Exuberance in Silicon Valley

[fareastwarriors]

Twitter Downgraded, Again: ‘Success Is Far From Guaranteed’

 

 

 

http://blogs.wsj.com/moneybeat/2014/01/06/twitter-downgraded-success-is-far-from-guaranteed/

[Guest ajc]

Incremental News, Price and Value: The Twitter Earnings Report & Market Reaction

 

"It is difficult to believe but its been only just over three months since Twitter went public, opening at $46/share and then continuing its climb into the stratosphere, in the weeks following.

As many of you who read my posts know, my assessment of Twitter's value, prior to the IPO, was about $18/share and I believed then that  the $26/share at which the company was priced was a reach.

Clearly, the market believes otherwise.

 

Last week did see a setback, though it may be temporary, in Twitter's climb. It came in the form on an earnings report that on its face, at least, looked like it contained good news.

The company reported revenues that beat expectations and claimed to have turned the corner on profitability, at least using its own adjusted version of earnings, with positive earnings per share for the quarter. The market, though, reacted negatively, wiping out 25% of Twitter's market value in the course of a few minutes.

Note, though, that even after this drop, Twitter's stock price is at $53, well above my target range for its value.

 

In this post, I would like to first look at the news in the earnings report, and then update my valuation to reflect Twitter's first quarterly earnings report and see if value (or at least my assessment of it) has shifted. I would like to follow up with an examination of why the market price may have reacted the way it did to the information in the report..."

 

http://aswathdamodaran.blogspot.co.uk/2014/02/incremental-news-price-and-value.html

 

 

[Liberty]

So who here is still short Twitter? Does today change your thesis?

 

Days like today remind me why I don't have the stomach to short, especially not fast-changing companies based primarily on valuation...

[PatientCheetah]

Good perspective

http://aswathdamodaran.blogspot.ca/2014/02/facebook-buys-whatsapp-for-19-billion.html

 

"Here is what I take out of these numbers:

 

If you are an investor, stop trying to explain price movements on social media companies, using traditional metrics – revenues, operating margins and risk. You will only drive yourself into a frenzy. More important, don’t assume that your rational analysis will determine where the price is going next and act on it and trade on that assumption. In other words, don’t sell short, expecting market vindication for your valuation skills. It won’t come in the short term, may not come in the long term and you may be bankrupt before you are right.

 

If you are a trader, play the pricing game and stop deluding yourself into believing that this is about fundamentals. Rather than tell me stories about future earnings at Facebook/Twitter/Linkedin, make your buy/sell recommendation based on the number of users and their intensity, since that it what investors are pricing in right now.

 

If you are a company and you want to play the pricing game, I think that the key is to find that "pricing variable" that matters and try to deliver the best results you can on that variable."

 

"My experience with markets has been that no one has a monopoly on virtue and good sense and that the hubris that leads to absolute conviction is an invitation for a market take-down."

[JAllen]

Twitter's having its investor day today, and even if you don't like TWTR, they're talking about lots of interesting stuff that applies to large tech companies, e.g. years it took from $1B-$14B revenue for large tech companies.

 

 

http://www.media-server.com/m/p/2vkkeeov

[ccplz]

Thoughts on TWTR at the current price / after change of management?

[JayGatsby]

I've been short for some time, although I've been impressed with the changes Dorsey has made.  My issues with it are the following:

1. The user growth is slowing. In the US QoQ growth was 0%

2. They've benefited from increasing ads faster than they've increased users, but I think you can only push that so far

3. I think the biggest bull case for it (based on a pretty smart guy I sat next to on an airplane) is that the information they gather on their users is hugely valuable and can be resold.  I think this information has become somewhat of a commodity though. There are tons of companies placing cookies and knowing what I look at on the internet. Facebook knows more about me than twitter. Google knows more about me than Facebook. Ultimately I'm not even sure there's much value to that data, because I think most sites have a pretty good sense for the demographics of their user base and can market based on that.

4. I'm not sure what Twitter wants to stand for as a company. It used to stand for 140 character text strings. Now they're trying to do a little bit of everything (pictures, videos, etc). They aren't going to be the leader in these and they risk diluting what they have.

5. I think when these social sites are new they're fun and then people gradually lose interest. Since they don't create any content this can become a vicious cycle.

 

I've been toying with closing out my short. In retrospect I  should have done it while Dorsey was interim. I still think it's overvalued, but it has some upside potential here too. If it was run for cash I don't see why their margins couldnt be insane.

 

[TwoCitiesCapital]

Just curious what anyone is thinking here. I don't own the name and dont' really have intentions of opening a position, but am interested now that it's down 70+% from its highs and because having an audience that large and being a core of pop-culture and journalism has to be of some value.

[Jurgis]

If it dropped 50% from here, it would be cheap on P/TB and P/FCF basis. So probably it won't.

Prices between here and 50% drop may be attractive depending on the degree of optimism regarding their future.

 

To buy them out, someone would have to pay 2x probably. So probably won't happen. If Balmer still ran MSFT, he'd possibly buy them.

[bonkers]

My thinking is that still -80 % down and it starts to be a net-net.

I'll take another look then.  ;)

[Graham Osborn]

Here's my calculation of fair value.  The current price isn't much below this - OTOH, you can see the revenue multiples for FB and LNKD are considerably higher.  The social media cos are engaged in fierce price wars rights now that are destroying margins in mobile.  FB has tried to buy the company twice apparently, originating the famous Zuck quote:

 

“[Twitter is] such a mess, it’s as if they drove a clown car into a gold mine and fell in.”

 

Admittedly, their cash is derived from equity and CD financings and their SBC program is extravagant.  This situation should not continue.  I'm betting someone will buy the mine and fire the clowns :) I do like the fact that Jack Dorsey declined compensation when coming back on.

20160805_TWTR_valuation.docx

[TheAiGuy]

Hmm... I think that valuation is too rich. Frankly, the company is sub-scale as an internet advertiser and while the platform has value to a strategic acquirer that integrate it into its own ad network (Verizon, Facebook, Google -- though Verizon is probably the only one that would pass antitrust scrutiny, maybe Buzzed, Snapchat), I have a hard time seeing how the company reaches profitability on its own.

 

Other thoughts:

• The SBC is a positive, b/c its non-cash and at a high valuation. Without it, the company would be burning though cash.
  
• One reason LKND is said to have sold is the crash in it's stock price. Allegedly, they were worried their engineers would leave
  

 

 

[SmallCap]

Trump is no longer allowed to use Twitter.

 

http://www.chicagotribune.com/news/nationworld/politics/ct-donald-trump-twitter-20161107-story.html

 

What does this do to the valuation of Twitter?

it just lost so much entertainment value.

[BTShine]

Has anyone on Twitter noticed an improvement in their ad quality?

[TBW]

Out of curiosity I took my first look at Twitter.  It is well outside of my circle of competence but I like the product so was interested to take a look.  My first observation is that to look at cost structure vs FB.  Turns out that the cost on an employee basis is almost identical at 750k per employee.  Since these tech companies really just are smart ppl with computers, I thought this may be the right way to look at them on a comparative basis.  On that basis it, I guess I shouldn't be surprised how similar the expenses are given they both are looking to attract similar employees.

 

On the revs side, TWTR earns 701k per employee, FB 1,680k per ee.  That difference seems incredible.  Anyone have a view as to why the difference is so huge?  To give another data point GOOG is 1,252k per ee.

 

If we combine weak rev per ee with TWTR's lack of topline growth, it is difficult to think of what the stock price should be.  If Twtr was even able to get to revs of 1,000k per ee it would now be trading at 10x earnings + net cash, not terrible.  I have no clue how or if that is achievable. 

 

Any thoughts?

[Liberty]

My 2 cents: Twitter lacks the scale to be attractive to advertisers, as well as the data to target ads competitively (which would make them more valuable). It's a vicious cycle, because when you have crap inventory, you can't target well, and when you can't target well (because everyone's anonymous and there's so much abuse/bots), you don't get very good inventory.

 

If you're a big advertiser, it's much easier to go to both Google and Facebook and do a big buy that will reach everybody you want to reach than to go to Twitter and do a small buy and not be sure you're reaching the right people.

 

That's why I think ultimately Twitter will be bought by FB or GOOG and plugged into their existing ad networks. That's probably where it's most valuable, though maybe someone else will overpay for strategic reasons (lately that's AT&T and VZ it seems). Getting the feeling maybe the same will happen to SNAP down the road...

[Peregrino]

In the last three years they spent over $2B on research and development. 

 

Last I checked, it's still 140 characters...

[LongTermView]

In the last three years they spent over $2B on research and development. 

 

Last I checked, it's still 140 characters...

 

Yeah, I'm guessing the ROI on that $2B is pretty low.