There are lots of good reasons why one might want to short Twitter (TWTR). The company has no earnings, it sports a ridiculous price/revenues multiple, it suffers from a frightening user churn rate, and that's the start of the laundry list.
So why wouldn't I short it?
An Existential Question
Personally, I don't care much for Twitter as a product and have never understood its appeal.
Indeed, I confess that it's hard for me to understand why this company even exists. The communications "product" it offers is annoyingly restrictive. The sub-culture it thrives off of is frivolous and faddish. Twitter's technology and product format is easy to copy. The firm faces fierce competition from tech giants such as Google (GOOG), Facebook (FB) and might eventually be threatened by Apple (AAPL) or Microsoft (MSFT). And I could go on and on about how precarious this whole enterprise seems to be.
But that is my point: I don't get it! And quite frankly, I think that 95% of all traders out there shorting Twitter or contemplating a short don't get it either. If you asked virtually anybody that is old enough to be a serious securities analyst or investor, they would have told you five years ago that this company did not stand a chance to survive. And they would have been wrong.
So back to why I would never short this stock. There is a very wise adage that says that you should never invest in a company that you do not understand.
And here is a corollary: NEVER, NEVER, NEVER short a stock that you do not fully understand.
The only thing that is relatively clear to me is that Twitter is a modern social phenomenon. But will it endure? Twitter could become relegated to the ash heap of the history of frivolous fads, or it could become a cultural fixture and/or evolve in ways that allow it to do so.
I won't even begin to answer that question because I don't understand Twitter's present; therefore it would be foolish for me to pretend to know what the future holds in store for the stock of this company. And I doubt that very many people of a certain age and background can understand it either.
For most of us who have a certain amount of experience in the investment business, this is a very good reason to forswear any investment in Twitter. And it may be the single best reason NOT to short Twitter.