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Hari Swaminathan
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OptionTiger.com is founded by Hari Swaminathan, an entrepreneur, everyday person and a self-taught Options trader for over 5 years. Hari also writes the blog at OptionTiger.com, an insightful commentary of the most important issues in macroeconomics, investing, trading, Option strategies, Index... More
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  • Twitter IPO 0 comments
    Oct 7, 2013 6:52 AM

    This post was originally written on October 4, 2013 at http://www.optiontiger.com/twitter-ipo/

    The big news in the IPO and Social Media worlds is the Twitter IPO. Twitter is of course one of the social media's stars, and some would argue, is the predominant method of breaking news dissemination around the world.

    The Twitter IPO unveils a plan to raise $1B, at a valuation of $13B. Seems reasonable for a global brand, right ?

    Well, its numbers are less than stellar, however. First of all, it's not profitable. While revenues doubled in the first half of 2013 to $253M, so did its expenses at over $300M. On the face of it this would seem to be another great social media company, but one whose operations as a business might be questionable.

    This is exactly what people said about Linkedin when it came out with its IPO at $45/share. And it's over $250 today. But, arguably Twitter will face more challenges to building its revenue stream due to the inherent limitations of its 140-character format.

    But investors may not look at all of this at the time of the Twitter IPO. The stock will most certainly be popular. And we can't wait until Twitter options start trading. It's bound to be an exciting sock to trade, and a definite member in any serious Options trader's watch list.

    Here's an image (courtesy Bloomberg) of Twitter's sales growth. Not surprisingly, profits (or losses in this case) is missing.

    (click to enlarge)

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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