Alex Filonov's  Instablog

Alex Filonov
Send Message
I was born in 1956 in USSR. After graduation from college in 1979 I worked full-time as an IT specialist. Until 1990 I worked for different companies in the Soviet military industrial complex. I created a small software business in 1991, which failed in 1993. I worked for Oracle Corp in 1995 in... More
My blog:
Muddling Investor
  • Everybody Hates Twitter. That's Why I Bought It 11 comments
    Apr 26, 2014 12:16 AM | about stocks: TWTR, FB

    I waited. And waited. Wanted to buy Twitter (NYSE:TWTR) for a long time. But price was too high for my taste. Now it's close to the IPO price. So I decided to open this position. Another reason: nobody likes the company. Cramer plain hates it.

    I think this company can make big money for shareholders. They just started monetizing and are close to break even. Might be something like Facebook (NASDAQ:FB), which increases earnings despite all forecasts.

    Twitter reports next Tuesday. Nobody knows what is in the report and how market would react. So I started position today, and if stock drops after earnings, well, that would be a good reason to increase position.

    It's hard for me to understand current internet sell-off. The biggest risk right now is war between Russia and Ukraine. Formally speaking, war is going on, it's just not full scale. But what does it have to do with the internet? Whatever any internet company is earning in these two countries can't be seen in the microscope. Industrials and energy are more at risk here.

    Disclosure: I am long FB, TWTR.

    Additional disclosure: Positions can change any time.

    Stocks: TWTR, FB
Back To Alex Filonov's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (11)
Track new comments
  • samuel_liu
    , contributor
    Comments (2753) | Send Message
     
    I am in Shanghai, and used to use huffingtonpost.com to get out my once in a while twitter posts. A few months ago, I could no longer post on that site because I do not currently have a Facebook account. And eventually that twitter convenience was removed.

     

    So when I was stranded at Hong Kong Airport last month, rather than tweet which I could there, I went to a computer and sent some messages over Seeking Alpha to inform of my plight (7 hours in an exclusive airport/shopping mall, oh the horrors!).

     

    The situation as I see it is the market (S&P) is over-valued and the media is faulting IT, but they did not mention Msft, INtc, Csco-- there was twtr, lkdn, fb, ...

     

    So I'm a chicken and will stay on the side lines as I try to get rid of some of my p/f in old-time IT.

     

    I am not a trader!
    26 Apr 2014, 12:38 AM Reply Like
  • hotatsoon
    , contributor
    Comments (31) | Send Message
     
    i totally agree on TWTR.

     

    with a cut loss below 38.80 i think nothing much can go wrong with existing low 41 levels.

     

    compelling risk rewards!

     

    Cheers
    TS ho
    26 Apr 2014, 05:42 AM Reply Like
  • James Sands
    , contributor
    Comments (2637) | Send Message
     
    Alex,

     

    I think Twitter is interesting, but it's hard to speculate on future earnings when the company is losing so much money during the next 2-3 years.

     

    I am in tech for sure holding Facebook, Weibo, Baidu, and Yandex. Based on valuation, I feel that Baidu and Yandex are much better growth plays than companies like Twitter or LinkedIn.

     

    If prices were to come down, then maybe. U.S. high-growth tech and many companies from Amazon, Netflix, TripAdvisor, Yelp, Pandora, Twitter, LinkedIn etc. are all very overvalued at the moment. This is based on my ten-year estimates for growth and P/E ratio assumptions near 25/30. Some companies display not much higher stock prices than today when considering share dilution and varying levels of profit margin.

     

    All companies need to earn profits over the long-term..When a company like Amazon gets back to the $175/share level, then it may merit a look. Twitter, who knows the company's value today. If the company can generate a 20% profit margin in ten years, with share dilution, and a P/E near 30, the stock could conceivably trade around $75/share...something to think about.

     

    Thanks for the write-up.

     

    James
    26 Apr 2014, 07:24 PM Reply Like
  • Alex Filonov
    , contributor
    Comments (1411) | Send Message
     
    Author’s reply » What I really like about Twitter: this is a company with huge name and penetration and just at the beginning of monetization.
    Side note: stay away from Yandex, Putin last week reduced capitalization of company by more than 10%, just by saying several words. Russia is a money black hole, you can make quick buck by speculation, long term risk is huge. Baidu risk is lower, just because Chinese powers that be are saner than Putin. But I'd like to see how current financial crisis in China plays out.
    30 Apr 2014, 06:30 PM Reply Like
  • James Sands
    , contributor
    Comments (2637) | Send Message
     
    Alex,

     

    Thanks for the concern with Russian stocks. I am well aware of risks and am prepared to face them. Unfortunately I find better value in Russia and China despite country risk when compared to many U.S. tech companies for long-term growth potential.

     

    James
    1 May 2014, 11:48 AM Reply Like
  • samuel_liu
    , contributor
    Comments (2753) | Send Message
     
    " Formally speaking, war is going on, it's just not full scale. But what does it have to do with the internet? "

     

    Economic instability drives down confidence.

     

    Am I not right?
    29 Apr 2014, 05:09 PM Reply Like
  • Alex Filonov
    , contributor
    Comments (1411) | Send Message
     
    Author’s reply » Sure, but Internet companies don't have much presence in Ukraine and Russia. Industrials, financials (especially Visa and Mastercard), consumer goods (Coke, Pepsi, McDonalds, Nestle), all have big presence. They didn't get trashed.
    30 Apr 2014, 06:24 PM Reply Like
  • samuel_liu
    , contributor
    Comments (2753) | Send Message
     
    http://bit.ly/1fwKB5l
    Wells Fargo analyst Peter Stabler chimed in with his note: "User growth as reported remains troubling given what we believe is near universal consumer awareness of Twitter and unmatched levels of support from mainstream media," he said.

     

    "In short, we believe millions of consumers have sampled Twitter only to find a complex product with marginal relevance and value-a view we realize stands in sharp contrast to the fanatical loyalty the company enjoys among its core users," Stabler later added.

     

    CEO Dick Costolo defended his company in a Wednesday morning interview with Bloomberg Television, touting the ubiquity of its service.

     

    "It's already embedded into the fabric of the culture of not just the United States but the world. So in that sense, I very much think of it as a mainstream platform, and a durable and lasting platform upon which we can build a great business," Costolo said.

     

    Trader Steven Kaplan, right, works at the post that handles Twitter, on the floor of the New York Stock Exchange, Wednesday, April 30, 2014. Shares of
    Trader Steven Kaplan, right, works at the post that handles Twitter, on the floor of the New York Stock Exchange, Wednesday, April 30, 2014. Shares of Twitter dropped in morning trading Wednesday to their lowest point since the company went public in November. Investor concern remains over the short messaging service's ability to keep adding users and keep existing users engaged. (AP Photo)
    There is also concern about upcoming lockup expirations, which will free for public trading hundreds of millions of Twitter shares currently held by employees and early investors.
    1 May 2014, 11:36 AM Reply Like
  • Alex Filonov
    , contributor
    Comments (1411) | Send Message
     
    Author’s reply » There are always concerns. As for lockup expiration, it might play either way. I'm sure there is a lot of related arbitration activity, the question is whether arbitrators guessed right.
    2 May 2014, 11:44 AM Reply Like
  • samuel_liu
    , contributor
    Comments (2753) | Send Message
     
    Looking forward to the Alibaba pop in the markets, soon ...
    2 May 2014, 11:50 AM Reply Like
  • LisaParker
    , contributor
    Comments (16) | Send Message
     
    I agree this. But sometimes only...
    17 Jun 2015, 04:45 AM Reply Like
Full index of posts »
Latest Followers

StockTalks

  • Sold some $FB Mar 15 $80 covered calls and Mar15 $72.50 puts
    Jan 29, 2015
  • CLosed $LRLCY. Will buy back at lower level
    Jan 21, 2015
  • Added to $SAN
    Jan 7, 2015
More »

Latest Comments


Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.