Twitter Buyers Vanish, Tesla Needs A Huge Cash Raise? Teen Preference Survey - Eye On Tech

| About: Salesforce.com, Inc. (CRM)

Summary

Salesforce isn't interested in Twitter. So who's left? No one really.

Tesla may need to raise $12.5 billion in the next ~26 months, according to one analyst.

Piper Jaffrey's new teen survey polls 10,000 youngsters for thoughts on social media preferences, top restaurants and favorite websites to shop on.

Piper's Teen Survey Gives Possible Insight Into Future of Tech

Piper Jaffray's out with its latest survey that it takes among 10,000 teenagers. The concept is to get a better feel for what young people like, ranging from favorite handbag brands to top restaurants and (importantly for Eye on Tech) their favorite social media platforms.

Perhaps with little surprise, Snap (Private:CHAT) garnered the top result, with 35% of the vote. coming in behind Snapchat is Facebook's (NASDAQ:FB) Instagram, with just 24% of the votes. It wasn't that long ago that Instagram was the top dog on the list and in the spring finally conceded its grip atop the Iron Throne.

Engagement at Instagram is up - which is good for Facebook - but engagement for its own platform is down among teens. Perhaps with Instagram copying some of Snapchat's biggest features and the subsequent growth that has followed will help buoy the social media platform.

But the latest results could draw at least a little bit of concern considering that Snapchat continues to gobble up market share as the most preferred platform.

Other notables included Amazon (NASDAQ:AMZN) grabbing 40% of the top votes for their favorite website for shopping, with Nike (NYSE:NKE) coming in second at just 8%. Alphabet's (NASDAQ:GOOGL) (NASDAQ:GOOG) YouTube was the top platform for consuming video for 26% of respondents, edging out cable TV, which garnered 25% of the votes and gave YouTube its first "victory" over cable in this particular survey (which has now run for 15 years).

However, YouTube came in behind Netflix (NASDAQ:NFLX), which took a whopping 37% of results.

So is there anything standing out at the moment?

To me, I'm seeing Netflix and Amazon standing out - two stocks that have extreme bull/bear camps. While the valuations are high for each, the companies have strong moats and it looks unlikely that any particular competitor will knock them off in the foreseeable future. Even better is that today's young people are choosing these platforms as their "go-to," meaning that in the future, if they stay loyal, profits and sales should continue higher, while hopefully the valuation becomes more reasonable as a result.

With that being said, a pullback would create a much nicer buying opportunity than what we've got at current levels. Seems obvious, but it can be tempting to chase stocks like Amazon when everything seems to be going right. Currently at $823, it's sometimes easy to forget that just earlier this year shares traded for less than $500.

Also Read:

Why Facebook Is Ridiculously Overvalued

4 Reasons Facebook Will Sustain Its Growth

No Buyout for Twitter?

Shares of Twitter (NYSE:TWTR) tumbled even further Friday, falling 5%, and bringing the stock down about 16% for the week and more than 34% from its recent highs near $25.

What's got the stock falling today also has Salesforce (NYSE:CRM) rallying on reports that the cloud giant isn't interested in the micro-blogging site after all. Twitter "wasn't the right fit for us," CEO Marc Benioff said.

So with Salesforce officially out, and companies like Alphabet, Apple (NASDAQ:AAPL) and Disney (NYSE:DIS) removed as well, who else is left for Twitter? As the stock would indicate, no one really.

Did Facebook CEO Mark Zuckerberg really say that Twitter is "such as mess - it's as if they drove a clown car into a gold mine and fell in." He supposedly did within the past three years according to the publication, and that was in 2013. If he did say, he was very much on point - and honestly, not to ride the Zuck train here, but shows how much further ahead in tech he is than everyone else.

Again, I don't know if he really did say that - although you can find the quote in a number of different places - but when we were all cheering and talking up Twitter, Zuck already knew it wouldn't last. Or at least it appeared that way.

And now the company can't get anyone to buy it, even though it is now not too far from its all-time lows near $14. What does that mean going forward?

It feels like now the stock is sort of trapped in no man's land. Maybe it's a worthy pick up if:

A. It falls back to or makes new 52-week lows. It has value, but the price is the problem.

B. Its user growth and revenue metrics accelerate.

Addressing the second point, Twitter has seen its revenue growth rates quickly decline as user growth leveled out. Its revenue guidance for next quarter was more than 10% below analysts' expectations.

If this year's presidential election cycle - which has been the craziest for social media by far - streaming NFL games, and the Olympics weren't enough to get Twitter's business moving in the right direction, I honestly don't know what will.

And if that's the case, maybe that's what everyone else saw too. Everyone else being the supposed buyers that were around just a few weeks ago. If they don't want Twitter, why should we?

Which Is It: Tesla Does or Does Not Need Cash?

Just last week, after telling the Twitter world that they can expect a new product on Monday Oct. 17th, Tesla (NASDAQ:TSLA) CEO Elon Musk said Tesla wouldn't have to raised capital in the fourth quarter due to its planned acquisition of SolarCity (NASDAQ:SCTY).

It's still unclear if "not necessary" translates to "don't need to raise, but we will," or if it means "we don't need to and won't."

However, according to at least one analyst, raising capital isn't a question - the company will almost certainly have to. Again, Musk's tweet wasn't exactly specific. Not only are we unsure of how he meant it, but it also means that, technically speaking, Tesla could raise capital in Q1 and Musk would still be right.

In my opinion, Musk was simply telling the world that strictly financially speaking Tesla won't be forced to raise capital in the fourth quarter. Whether or not it does is a different story.

According to Colin Rusch of Oppenheimer, the company will need to raise $12.5 billion by the end of 2018. That's a lot of dough, especially considering that Tesla "only" trades with a market cap of $30 billion. So to raise that much money in the next ~26 months is pretty alarming, especially with the current levels of dilution Tesla shareholders are already going through.

Should Tesla get to a cash-flow positive position, then the need to raise capital falls. But with so much going on, many wonder if the company will be able to do that any time soon.

Aside from its SolarCity acquisition, which is losing money and burning a lot of capital as well, Tesla is rolling out its Model 3, expanding its factories and continuing to work on its Powerwall product.

Hopefully in the company's upcoming quarterly conference call we will get more details to sink into.

Also Read:

Tesla: How Does 50% Dilution Sound?

Tech Tidbits:

Sony (NYSE:SNE) launched its VR product this week, and reports show that sales are going strong. For the record, it's got a higher rating on Amazon than both the HTC Vive and Oculus Rift (the latter of which is owned by Facebook) - although, it's still early in the VR race.

Samsung expects to lose at least $5.3 billion from the Galaxy Note 7, which is now expected to be banned on U.S. flights.

From Verizon's (NYSE:VZ) General Counsel Craig Stillman: "I think we have a reasonable basis to believe right now that the impact is material and we're looking to Yahoo (NASDAQ:YHOO) to demonstrate to us the full impact…If they believe that it's not, then they'll need to show us that."

Will Verizon still pay full price for Yahoo?

Disclosure: I am/we are long DIS.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.