Seeking Alpha

Twitter soars again; valuation reaches stratospheric levels

  • Though a number of high-beta Internet names rallied today - Facebook moved higher with the help of a bullish Cantor note - Twitter (TWTR +7.7%) took the cake once again. Following today's gains, which came in the absence of major news, Twitter is up 148% from its $26 IPO price, and 43% from its opening trade of $45.10.
  • After factoring options and restricted stock units, Twitter's market cap is north of $45B, and is respectively equal to ~70x and ~40x consensus 2013 and 2014 sales estimates. Short-covering (previous) likely played a role in today's rally.
Comments (14)
  • Philip Marlowe
    , contributor
    Comments (920) | Send Message
     
    You probably meant to say "consensus 2013 and 2014" sales estimates. Just letting you know so that you know that someone out there is still reading your posts :)

     

    PS: Those numbers would be kind of high if there P/E numbers. Being P/S numbers they are kind of ... insane.
    23 Dec 2013, 04:15 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2271) | Send Message
     
    Shades of 1999 in the momentum stocks. Cramerica is probably just getting the first initial buzz from the parabolic momentum stock Kool-Aid, so this could go on for a while before they end up twitching on the floor with foam spewing out of their mouths (as in late 2000).
    23 Dec 2013, 04:35 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2927) | Send Message
     
    Could easily -- easily top 100. Not remotely like 1999.
    23 Dec 2013, 06:30 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2271) | Send Message
     
    Yeah man, and gold could have gone to $5000, except that it didn't. Every year is a new con-job. Baby boomers are serial bubble blowers afflicted by juvenile greed compulsions and a desire to get something for nothing. Tech stocks, real estate, gold, social media, etc, etc. No other generation in history had so many greed driven bubbles/busts.

     

    It ends up costing the country so much each time reality imposes itself upon the infantile greed behavior. Pathetic.
    23 Dec 2013, 06:48 PM Reply Like
  • rambler1
    , contributor
    Comments (395) | Send Message
     
    Kind of ironic when it first started trading in the 40's most firms thought it was a short. What must they think now, and the consensus seems to have turned to a buy.
    23 Dec 2013, 08:24 PM Reply Like
  • omarbradley
    , contributor
    Comments (966) | Send Message
     
    oooops.
    24 Dec 2013, 09:32 AM Reply Like
  • stoj
    , contributor
    Comments (270) | Send Message
     
    I like Twitter valued like this ( because then, I don't have to bother buying it )
    23 Dec 2013, 09:32 PM Reply Like
  • JSB163
    , contributor
    Comments (44) | Send Message
     
    Very nice to see the excessive valuations come back into the stock market. Who says there is very little inflation in the economy? I still remember the tech bubble and will just patiently wait. I stay long the index funds and just nibble at the edges on long term leap puts. No need to be greedy.
    24 Dec 2013, 01:24 AM Reply Like
  • omarbradley
    , contributor
    Comments (966) | Send Message
     
    greedy? this is free money. those that got in on the ground floor of this IPO are rich beyond belief right now. as is normative this year "the shorts have been annihilated" as well.
    24 Dec 2013, 09:32 AM Reply Like
  • 81george
    , contributor
    Comments (237) | Send Message
     
    Once again I am beginning to believe that stock market is one big casino with TWTR beating all the odds. What can prevent FB to roll out its own microblogging platform for its 1 billon members and kill TWTR?
    24 Dec 2013, 01:52 AM Reply Like
  • 81george
    , contributor
    Comments (237) | Send Message
     
    Once again I am beginning to believe that stock market is one big casino with TWTR beating all the odds. What can prevent FB to roll out its own microblogging platform for its 1 billon members and kill TWTR?
    24 Dec 2013, 01:52 AM Reply Like
  • omarbradley
    , contributor
    Comments (966) | Send Message
     
    incredible.
    24 Dec 2013, 09:30 AM Reply Like
  • BuyToSell
    , contributor
    Comments (215) | Send Message
     
    momentum based on supply and demand pure and simple. there's not very many shares of twitter available so any buying moves the price dramatically. this will change after the lock-up expiration - sometime in the first quarter of CY 2014
    24 Dec 2013, 10:17 AM Reply Like
  • TradesandHolds
    , contributor
    Comments (32) | Send Message
     
    Interesting that of the 5 lead underwriters of TWTR's IPO in November, 2 of them, Goldman Sachs and Deutsche Bank, came out with buys, 2 others, JP Morgan and Morgan Stanley, came out with holds; and Bank of America/Merrill Lynch came out with a sell at 36. (At the time TWTR was trading at 43.) Keep in mind, at that time, Goldman Sachs, the lead underwriter had a price target of $46.

     

    At these present levels of 69, there is just no merit to valuation. Low float, short covering, and lock-up are propping up the stock price as well as an unrealistic and unsubstantiated investor optimism. Regarding low float, only 13% of TWTR are traded and are part of the IPO. The remaining 87% of the shares are to be released, with the first 10MM shares being released in February 2014.

     

    Expect a mass exodus and a rapid and concomitant decline in price shortly. I expect it should occur long before the first lock-up expiration and before the earnings release in February 2014.

     

    Finally, TWTR lists 504MM shares in its IPO, but with RSU's (restrict stock units, options, etc), actual shares are closer to 705MM. If a follow-up offering is undertaken, then TWTR shares could balloon to 723MM by the end of 2015. Obviously incredibly dilutive events on the horizon for TWTR.

     

    Just went short on 12/24.
    25 Dec 2013, 12:36 PM Reply Like
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