TWTR - Twitter, Inc.

[johnny]

Very little contact with Twitter people, but I've had some. Here are my super-uninformed impressions:

 

Twitter's curse is that it gets categorized with Facebook. They're stuck in a pretty vicious and costly signaling game where every Twitter employee is sensitive to any slight hint that these are not actually comparable employers/jobs/products. So Twitter is basically wasting a ton of money on Jonesing-Keepup with companies it has no business trying to keep up with.

 

I formed this opinion specifically while I was hanging out with about 1.5 million dollars worth of  Twitter employees in LA, who were ostensibly there working, evangelizing a product that could have been thoroughly explained in a 10 minute Youtube video. I recall having the impression that Twitter was paying for the bar afterwards too. Just not the sort of thing you'd expect to see from a breakeven public company. That entire division is gone now, by the way. But who knows what percentage of the company is so easily eliminated.

[Guest 50centdollars]

I dont think twitter will become profitable simply because its a negative thing. When you hear tweets in the news the majority of the time it isn't good news.

 

A lot of people thought that Donald Trump using twitter so much would boost up the stock price as the number of users would increase.  But again, two aspects of twitter predominate - we read about tweets in the news, not on twitter itself.  There was no mass movement to join the service and read Trump-tweets in real-time.  And when we read these tweets in the news, it isn't "Gee, President Trump said something significant in 140 characters!" but rather, "Can you believe what asinine thing the President just said?"  Again, nothing good comes out of Twitter, but a lot of bad does.

 

So most folks don't use Twitter. And since we don't use it, we don't see the ads.  And since we don't see the ads, Twitter doesn't make money. The service is popular, with a certain group of people, such as celebrities, journalists, and politicians. These are not even the people you want to see the ads.  You want the plebes to look at the ads, as they are the highly suggestible depressed "consumers" who will buy your crap. Donald Trump, tweeting on the toilet in the wee hours of the morning, isn't likely to respond to an ad placed on Twitter. Since so many bad things happen on Twitter, who would want to advertise on it? What company wants their ad next to a stupid Trump tweet or to any stupid tweet really?

 

My girlfriend runs a boutique PR business and her clients are slowly figuring out how bullshit social media advertising is. They're going back to traditional ads because its more intelligent advertising.

[JayGatsby]

I dont think twitter will become profitable simply because its a negative thing. When you hear tweets in the news the majority of the time it isn't good news.

 

A lot of people thought that Donald Trump using twitter so much would boost up the stock price as the number of users would increase.  But again, two aspects of twitter predominate - we read about tweets in the news, not on twitter itself.  There was no mass movement to join the service and read Trump-tweets in real-time.  And when we read these tweets in the news, it isn't "Gee, President Trump said something significant in 140 characters!" but rather, "Can you believe what asinine thing the President just said?"  Again, nothing good comes out of Twitter, but a lot of bad does.

 

So most folks don't use Twitter. And since we don't use it, we don't see the ads.  And since we don't see the ads, Twitter doesn't make money. The service is popular, with a certain group of people, such as celebrities, journalists, and politicians. These are not even the people you want to see the ads.  You want the plebes to look at the ads, as they are the highly suggestible depressed "consumers" who will buy your crap. Donald Trump, tweeting on the toilet in the wee hours of the morning, isn't likely to respond to an ad placed on Twitter. Since so many bad things happen on Twitter, who would want to advertise on it? What company wants their ad next to a stupid Trump tweet or to any stupid tweet really?

 

My girlfriend runs a boutique PR business and her clients are slowly figuring out how bullshit social media advertising is. They're going back to traditional ads because its more intelligent advertising.

A friend of mine does Facebook ads for a clothing company and they do really well. It's a niche product so the targeting is key for them. He never found Twitter as targetable.

 

[adventurer]

Twitter or social media in gerenal are in need of a continously rising number of members and customers that pay for ads. These social media platforms can be the oil between customers and companies. I personally see a similiar development with Twitter in comparison to Facebook. Because after the IPO Fbs stock fell because they had troubles using ads in a profitable way and so is Twitter I suppose. After Twitter reported a rise in new members, a rise in use of their ad-products as well as shrinking costs per such a product and spendings in sales there are certainly chances for a similiar development as Fbs stock saw it.

 

It appears to me (though this topic is a bit older) a lot of users have forgotten about the human nature. Because on a psychological basis people want to be seen, they want attention and they want to be near their idols. The addiction to social media is perfect for feeding consumers with ads and they do not even realise they are being influenced. Social media is a monopoly for ads.

 

Regarding the concerns from fellow members here, I do not believe that Twitter`s fade depends on Trump alone or some other person. As well as bad news influences Twitter`s profitability, bceause that would mean that if the NYT reports bad news from the world it would go bust too and how often did that happen in the past? And if you want to be very stringent: Twitter does not even have to have members because content can often be seen without being a member. But the stock market`s psychology seems to be dependent on those member numbers so...

[Guest Schwab711]

I think TWTR is cheap and severely under-monetized. It still trades at 28x FCF and 23x-25x NTM FCF with 10%+ revenue growth.

 

Ex-excess cash (leave $500m or so), total capital is roughly $4.5b, implying a ROIC of ~22%. ROIIC has been ~25% in recent years.

 

By most measures, it's a fantastic business trading at reasonable relative multiples.

 

The platform/culture is unique amongst internet sites and certainly anything historical. It is the first true public forum that allows anyone to connect with anyone. Folks can have their opinions broadcasted by the POTUS or discuss investing specifics with Jim Chanos on a regular basis. More importantly, the top individuals in nearly every field are active on the platform, which draws in aspiring individuals within those fields and so on.

 

TWTR is the fastest news wire available to citizens.

 

I have no idea if, when, or how they will ultimately decide to monetize the platform, but I think it's worth holding some position in TWTR.

[DooDiligence]

I think TWTR is cheap and severely under-monetized. It still trades at 28x FCF and 23x-25x NTM FCF with 10%+ revenue growth.

 

Ex-excess cash (leave $500m or so), total capital is roughly $4.5b, implying a ROIC of ~22%. ROIIC has been ~25% in recent years.

 

By most measures, it's a fantastic business trading at reasonable relative multiples.

 

The platform/culture is unique amongst internet sites and certainly anything historical. It is the first true public forum that allows anyone to connect with anyone. Folks can have their opinions broadcasted by the POTUS or discuss investing specifics with Jim Chanos on a regular basis. More importantly, the top individuals in nearly every field are active on the platform, which draws in aspiring individuals within those fields and so on.

 

TWTR is the fastest news wire available to citizens.

 

I have no idea if, when, or how they will ultimately decide to monetize the platform, but I think it's worth holding some position in TWTR.

 

I agree with the superior utility.

 

I find it 2nd only to CoBF.

 

The huge amount of gray space running along the left & right sides presents a monetization opportunity.

 

If they do it discreetly, that'd be great.

[Foreign Tuffett]

I think TWTR is cheap and severely under-monetized. It still trades at 28x FCF and 23x-25x NTM FCF with 10%+ revenue growth.

 

Ex-excess cash (leave $500m or so), total capital is roughly $4.5b, implying a ROIC of ~22%. ROIIC has been ~25% in recent years.

 

By most measures, it's a fantastic business trading at reasonable relative multiples.

 

The platform/culture is unique amongst internet sites and certainly anything historical. It is the first true public forum that allows anyone to connect with anyone. Folks can have their opinions broadcasted by the POTUS or discuss investing specifics with Jim Chanos on a regular basis. More importantly, the top individuals in nearly every field are active on the platform, which draws in aspiring individuals within those fields and so on.

 

TWTR is the fastest news wire available to citizens.

 

I have no idea if, when, or how they will ultimately decide to monetize the platform, but I think it's worth holding some position in TWTR.

 

On the other hand, as long as Dorsey is CEO the company will probably under monetize and overspend. Right?

 

I understand that Dorsey is founder/so-founder of each, but how long will this ridiculous situation in which he is CEO of two large tech companies continue?

[Jurgis]

What do you think about Jack Dorsey?

 

"Hatching Twitter" ( https://smile.amazon.com/dp/B00CDUVSQ0/ref=cm_sw_em_r_mt_dp_U_mI-7Cb9WRA7BQ  )

pretty much hatcheted him. Of course, it's one-sided account, but I'm not sure I want to invest into a business run by him.

 

Edit: lol what Foreign Tuffett said too.  8)

[DooDiligence]

Agreed again.

 

I love eggs but I'm not interested in owning a chicken farm.

[Jurgis]

I understand that Dorsey is founder/so-founder of each, but how long will this ridiculous situation in which he is CEO of two large tech companies continue?

 

Bbbbuttt, Elon Musk?

 

 

 

 

Hmm, I think I should not have said that.  8)

[DooDiligence]

I understand that Dorsey is founder/so-founder of each, but how long will this ridiculous situation in which he is CEO of two large tech companies continue?

 

Bbbbuttt, Elon Musk?

 

 

 

 

Hmm, I think I should not have said that.  8)

 

Elon is boring under your home right now in preparation to deploy robot chickens to wreak havoc.

[Guest Schwab711]

I think TWTR is cheap and severely under-monetized. It still trades at 28x FCF and 23x-25x NTM FCF with 10%+ revenue growth.

 

Ex-excess cash (leave $500m or so), total capital is roughly $4.5b, implying a ROIC of ~22%. ROIIC has been ~25% in recent years.

 

By most measures, it's a fantastic business trading at reasonable relative multiples.

 

The platform/culture is unique amongst internet sites and certainly anything historical. It is the first true public forum that allows anyone to connect with anyone. Folks can have their opinions broadcasted by the POTUS or discuss investing specifics with Jim Chanos on a regular basis. More importantly, the top individuals in nearly every field are active on the platform, which draws in aspiring individuals within those fields and so on.

 

TWTR is the fastest news wire available to citizens.

 

I have no idea if, when, or how they will ultimately decide to monetize the platform, but I think it's worth holding some position in TWTR.

 

On the other hand, as long as Dorsey is CEO the company will probably under monetize and overspend. Right?

 

I understand that Dorsey is founder/so-founder of each, but how long will this ridiculous situation in which he is CEO of two large tech companies continue?

 

I wasn't the biggest Dorsey fan for a while but both SQ and TWTR have been run quite well in hindsight. Both have favored innovation (it might be hard to see at TWTR but the improvement in advertising analytics has been huge) over immediate monetization and have now begun to slowly monetize. Maybe I just don't know enough about him to realize he's what everyone says, but it looks like Dorsey is more like Bezos than incompetent. His plans seemed crazy until they proved to be correct and both companies have low GAAP returns but produce a lot of cash.

 

I think Dorsey is misunderstood/underrated.

[Foreign Tuffett]

So these guys missed significantly on revenue last Q. Unfortunately for investors, they didn't come in light on expenses ("lower-than-expected revenue and no significant changes to our ongoing investments").

 

Is there something intrinsic about how Twitter works that makes it relatively unattractive to advertisers? Do ads just not get clicked on?

 

Also, Jack Dorsey just announced the following several hours ago: "We’ve made the decision to stop all political advertising on Twitter globally." Interesting.

 

https://twitter.com/jack/status/1189634360472829952

[mbreject]

They put ads in between tweets and it's annoying for some. I wish they'd put it on the side like FB does, but I understand how that wouldn't work for mobile.

[Spekulatius]

Looks like any social media platforms and Twitter in particular have a serious issue here with companies boycotting because they want to censor some content and others leaving because their content is censored too much:

https://www.cnbc.com/2020/06/27/parler-ceo-wants-liberal-to-join-the-pro-trump-crowd-on-the-app.html

 

I do think this will inevitably lead to me fragmentation in this space.

[fareastwarriors]

Looks like any social media platforms and Twitter in particular have a serious issue here with companies boycotting because they want to censor some content and others leaving because their content is censored too much:

https://www.cnbc.com/2020/06/27/parler-ceo-wants-liberal-to-join-the-pro-trump-crowd-on-the-app.html

 

I do think this will inevitably lead to me fragmentation in this space.

 

I thought other social media/discussion/forums tried hands-off approach before. Eventually the moderation had to come because there were too many crazies or the places shut down.

[Jurgis]

Looks like any social media platforms and Twitter in particular have a serious issue here with companies boycotting because they want to censor some content and others leaving because their content is censored too much:

https://www.cnbc.com/2020/06/27/parler-ceo-wants-liberal-to-join-the-pro-trump-crowd-on-the-app.html

 

I do think this will inevitably lead to me fragmentation in this space.

 

Parler CEO would be a bad CEO if he did not try to get people to join his platform.

 

Fragmentation is/was real before and it is going to be real in the future. Hey, look at investing universe. There's CoBF, SI, bogleheads, Motley Fool, and a bunch of more investing forums, not even counting Fidelity and other broker internal forums. If that's not fragmentation, then I don't know what is.

 

The real question for mainstream social media universe is whether there will be significant (10%+) shifts to/from new/old/different platforms. I am not sure. I think this is very hard to predict. Let's put it this way: the shift is hard in the beginning since your "friends" are on the old platform and your audience is on the old platform. If significant portion of either/both shifts, then it becomes easier. Overall though, I am not sure if people would prefer shifting to niche platforms. But if the niche platform somehow is very attractive, then people will shift.

 

I think that the demographical shifts are way more dangerous than the niche platforms. I.e. if young people abandon Facebook/Twitter/Instagram/WhatsApp, that is a way bigger audience loss than if some 0.01% of population consisting of righties/lefties/whatevers move somewhere.

 

I also mostly agree with fareastwarriors that "anything goes" platform is not going to work. It's going so self destruct really fast or become superniche. Hey, 4chan still exists. 8)

 

But sure there's always a risk that something appears that gets huge traction and huge move.

[Spekulatius]

The generational/ demographically shift is an issue, but it is a slow one. What is the mean age of a FB user? I guess it is probably above 50 in thr US. My son is on Snapchat and he also has an Instagram account. A lot of his classmates use Tiktok as well. I doubt he will ever get a FB account.

The fragmentation through new competitor could occur fairly quickly., which could impair valuation quickly. The problem I am seeing is that the very thing that increases user engagement (free uncensored speech) although leads to a toxic environment which makes it an issue for the advertisers. How to serve both well is an issue and I am not sure there is a good solution for all platforms.

[Liberty]

https://moiglobal.com/elliot-turner-202007/

 

Presentation on Twitter.

[Jmac42600]

Hey guys,

 

I'm new to the forum and this is my first post! I was wondering what your current thoughts are on Twitter. I don't own a position but I've been considering taking one recently.

 

I think the story has changed here. With Silver Lake coming on board, I think Twitter may be able to solve its monetization issue. I have faith that they can make something of the situation.

 

Twitter has great network effects and a very sticky user-base with a great switching moat. It's mDAU is growing at a great pace. The issue was always with management and monetization which has struggled in the past few years. But there's hints that Twitter's approach may be changing here. Here's a quote from Jack Dorsey in March:

 

“We're completely aware that people are more and more coming to Twitter to figure out what's going on with this crisis.  And we want to balance that responsibility with our business. And I think the company has proven throughout that we have the capability to do that.  But this kind of goes back to the point of our #1 goal on the revenue side is to increase durability, to not be so dependent upon one thing working and being -- and that it being stable.  But we have choices. We have things that may diminish and other things can rise in their place.  So as we look forward 3 to 5 years out, the most important thing for us as a company is to increase that revenue durability.  And that means experimenting with new models that also complement the advertising business.  And I'm proud to say that we're finally at a state as a company, we've done so much work on our foundation as a company. We've done so much work on our foundation from a technology perspective.  So we're finally in a position where we can start experimenting a lot more.  And we can start asking the questions that many of you have probably had in your mind, things like contribution models, tipping models, commerce models, payment models.  These are all things that we just could not prioritize in the past because we had to sequence it behind getting back to usage growth, getting more stability and a clear message around our advertising business and proving it.  And last year was a really big year for us, where everything started to align and compound into the results that we saw all last year and into this year.”

 

I think some different models could include a subscription fee to major news networks and journalists, as they have been "Free riding" on the platform (according to Dorsey recently) and able to advertise their articles for practically free. Possibly a monetization platform similar to LinkedIn?

 

The fact is Twitter is so valuable and has such strong network effects that I don't see how they couldn't be successful. It was always management that was holding them back and with Silver Lake coming on board, it seems to be challenging Dorsey to think outside the box and could finally unlock the value of the platform.

 

Do you guys think Twitter is a good turnaround play?

[JRM]

I have a 5% position in TWTR at a lower cost basis.  I don't have anything to add to the general thesis that the platform is under-monetized, and there should be some simple tweaks they can make to grow earnings.  They are not a great advertising platform, but large corporations will have no choice but to pay an annual fee to be 'verified' account and use the platform for cheap marketing.  Not sure how easy it will be to monetize smaller users who use it to market their blog\podcast.