Seeking Alpha

Twitter continues rally; Wunderlich sees short-covering, "cult status" at play

  • Wunderlich's Blake Harper, who launched coverage on Twitter (TWTR +7.3%) with a Sell on Nov. 18 and reiterated his view on Nov. 29, suspects the microblogging service's "cult status" among investors is contributing to its huge gains. "It appears valuation metrics are irrelevant and that investors are betting aggressively on Twitter being the next great media-technology platform."
  • Harper also notes 22% of Twitter's float was shorted as of Nov. 29, and that the float consists of just 11% of diluted shares outstanding. "There is $5.2 billion of public investor capital supporting the $46 billion market cap."
  • Also possibly helping Twitter's cause: End-of-year "window dressing" by fund managers, and the enthusiasm generated by the company's recent ad product barrage.
  • Shares are now up 164% from their $26 IPO price.
  • Yesterday: Twitter soars again; valuation reaches stratospheric levels
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Comments (32)
  • thodoris91
    , contributor
    Comments (56) | Send Message
     
    technology >> valuation
    24 Dec 2013, 12:17 PM Reply Like
  • 81george
    , contributor
    Comments (277) | Send Message
     
    TWTR became a no brainier. Just buy hold for a few days and make 20% return. Why resist the trend, go with the flow.
    24 Dec 2013, 12:23 PM Reply Like
  • BuyToSell
    , contributor
    Comments (220) | Send Message
     
    what he said
    24 Dec 2013, 12:24 PM Reply Like
  • 81george
    , contributor
    Comments (277) | Send Message
     
    The problem with all the cults, they all end up either dead or mentally scarred.
    24 Dec 2013, 12:27 PM Reply Like
  • Sellinpanic
    , contributor
    Comments (645) | Send Message
     
    ...or take the quick profits provided by the hype. Bought 1000 shares at $51, sold today at $70, $19.000 profit in mere 10 days. What's not to like? Folks keep up beating 'cult stocks', I'll keep taking easy fat profits.

     

    Merry Christmas everyone! ;-)
    24 Dec 2013, 12:50 PM Reply Like
  • psychological-dividends
    , contributor
    Comments (777) | Send Message
     
    Just wake me up when it's all over.
    24 Dec 2013, 04:44 PM Reply Like
  • macbeth48
    , contributor
    Comments (12) | Send Message
     
    TWTR stands for.. "The Way To Riches" . .... crazy valuation like TSLA and all those 3d printing stocks.
    24 Dec 2013, 12:46 PM Reply Like
  • Sudarshan Athukuri
    , contributor
    Comment (1) | Send Message
     
    just sell short, in jan 2014, it's going to be back to where it started...lower 40"
    24 Dec 2013, 01:17 PM Reply Like
  • Kamil Kolacek
    , contributor
    Comments (813) | Send Message
     
    It's your funeral then buddy! Never short a momo stock on the way up.
    25 Dec 2013, 11:28 AM Reply Like
  • Henosis
    , contributor
    Comments (2) | Send Message
     
    Two bits propping this up: (1) retail shorts, who keep shorting, covering at higher prices, reshorting, etc, etc. (2) lots of puts bought; MMs want to make sure these stay out of the money so they can collect the premium (IV is pretty high, so premiums are juicy).

     

    Also, institutions will not sell now, as they need TWTR for year-end window-dressing. In the new year, some might be tempted to cash out, BUT they also know there will be new money inflow into mutual funds which could drive all stocks higher.

     

    However, valuation is unsustainable, and if TWTR was smart, they'd do a secondary, use the proceeds to acquire or develop new lines of business.

     

    BTW, does anyone use TWTR other than publicity hounds? I live in Silicon Valley and none of my friends or acquaintances use it, though most have accounts. Novelty wore off pretty quick. FB is much better (never thought I'd be defending FB, until this oinker showed up - everything is relative, I guess)

     

    Most of my children's friends have Twitter accounts but ALL have stopped tweeting, though they will occasionally RT. They're messaging on FB a whole lot more.

     

    Just some anecdotal info, FWIW
    24 Dec 2013, 01:17 PM Reply Like
  • Kamil Kolacek
    , contributor
    Comments (813) | Send Message
     
    I think that is pretty good anecdotal information. Thanks. Twitter is good when you want to get some type of breaking news / info quickly and before it is broadcast anywhere else. Of course, at times that info is not accurate, but if you follow enough sources then it is pretty good at fig. out if some type or recent breaking news is false or not. News spreads quickly and rather efficiently on the platform and like wild fire at times.

     

    Despite it's valuation I would not be SHORT this name. It has only recently gained momo status and valuations can remain irrational for longer one can remain liquid. Witness AMZN for it's entire public existence !!
    25 Dec 2013, 11:32 AM Reply Like
  • Mark Krieger
    , contributor
    Comments (4007) | Send Message
     
    what will happen to the price once insiders are allowed to begin selling their shares? Those guys will certainly want to monetize their paper gains.
    24 Dec 2013, 01:28 PM Reply Like
  • TheAxe
    , contributor
    Comments (132) | Send Message
     
    No float equals huge moves....at this rate of gain 100 is possible by Jan 1. that would be a 70 billion dollar market cap, for a company that does not make money....watching from afar.......
    24 Dec 2013, 01:53 PM Reply Like
  • Mark Krieger
    , contributor
    Comments (4007) | Send Message
     
    The axe: No float? what are you talking about?..its float is quite substantial at 284 million shares, that represents more than 1/2 of its 545 million shares outstanding and one other point.... AMZN has a $183 billion market cap and it does not make money either
    24 Dec 2013, 02:15 PM Reply Like
  • BuyToSell
    , contributor
    Comments (220) | Send Message
     
    i think what he means is that they only released a small float to the public. the rest is all to insiders. while the limit on insider plays is in effect, there's a supply constraint, hence the huge moves.
    24 Dec 2013, 02:21 PM Reply Like
  • omarbradley
    , contributor
    Comments (966) | Send Message
     
    AMZN doesn't show a profit. my understanding is that their discounting of cash flows is quite impressive. in other words you and i only see the p/l statement...AMZN is a massive free cash flow generator. twitter i have no idea about. it is what all of us are doing here now of course.
    24 Dec 2013, 03:18 PM Reply Like
  • Andrei Volgin
    , contributor
    Comments (584) | Send Message
     
    AMZN generates massive free cash flow!? Their cash flow is paltry and falling for the past 3 years.
    24 Dec 2013, 04:08 PM Reply Like
  • jammerculture
    , contributor
    Comments (400) | Send Message
     
    Twtr is not a tech stock. They don't create any tech, they use tech to entertain idiots.
    24 Dec 2013, 02:04 PM Reply Like
  • omarbradley
    , contributor
    Comments (966) | Send Message
     
    not true. again...you've just sent a tweet with those two sentences...you've probably been tweeting for many years...certainly twitter has been around many years. this is not "theglobe.com." there is a lot of analysis of your word smithing to "divine" who you are via your tweets. this is very valuable information...and has been for some time now. is it this valuable? if i were the CEO i would say "that's for the market to decide. we've got a business to run."
    24 Dec 2013, 03:20 PM Reply Like
  • Tales From The Future
    , contributor
    Comments (4956) | Send Message
     
    There isn't even a high short float in $TWTR, afaik still below 10%.

     

    Surging again today on no news.

     

    This is the posterboy stock for a new tech bubble, plain and simple.

     

    This will end badly on earnings one day or when "investors" flock to the next name in the space (Whatsapp, Snapchat or some cheeseburger cat picture IPO...).
    24 Dec 2013, 02:23 PM Reply Like
  • jammerculture
    , contributor
    Comments (400) | Send Message
     
    Lol cheeseburger cat picture IPO. That's got to be worth 100$ billion.
    24 Dec 2013, 02:28 PM Reply Like
  • omarbradley
    , contributor
    Comments (966) | Send Message
     
    so no one said anything when Facebook Face Planted in the worst IPO in US history. And no one says anything as Twitter is easily the most undervalued IPO...certainly since Google...although that company had a dutch auction and didn't take off like a rocket initially.
    24 Dec 2013, 03:24 PM Reply Like
  • Kamil Kolacek
    , contributor
    Comments (813) | Send Message
     
    Yes, maybe true, but in the meantime irrational exuburence might tech this name to $100+.
    25 Dec 2013, 11:37 AM Reply Like
  • Tales From The Future
    , contributor
    Comments (4956) | Send Message
     
    "Lol cheeseburger cat picture IPO. That's got to be worth 100$ billion."

     

    My comment was of course ironic, but sadly enough this may be a reality if the social media bubble continues...
    26 Dec 2013, 06:37 AM Reply Like
  • Andrei Volgin
    , contributor
    Comments (584) | Send Message
     
    TWTR is a not a cult. Day traders and algo-traders could not care less what TWTR is doing, and how its financial statements look like. A few months/years from now there will be articles asking how so many people can get so stupid all at once. They are not being stupid: they are greedy, and they gamble. Some will succeed, many more will lose a ton of money.
    24 Dec 2013, 04:13 PM Reply Like
  • psychological-dividends
    , contributor
    Comments (777) | Send Message
     
    Isn't betting on a unprofitable company akin to going to Las Vegas and spinning the roulette wheel? Look I won!
    24 Dec 2013, 04:48 PM Reply Like
  • Kamil Kolacek
    , contributor
    Comments (813) | Send Message
     
    AMZN?
    25 Dec 2013, 11:38 AM Reply Like
  • patt2374
    , contributor
    Comments (553) | Send Message
     
    "What goes up must come down spinning got to go round "

     

    If you missed,like I did, just wait for it to fall then buy it again.

     

    Why try to be rational? Why do valuations? Forward EPS? WHO CARES????

     

    It is all a pull on slot machine
    24 Dec 2013, 10:20 PM Reply Like
  • maggas
    , contributor
    Comments (473) | Send Message
     
    All I can say is, I like the kid that founded TWTR, none of posters can claim that the kid has done, I do not understand the purpose of a twit, since I love e mail, could care less about FB, but I did capitalize on people's stupidity and bought bunch of twtr options ,and made enough money to laugh at the posters who post negative things about twtr, and have made zero on the way up, and lets see if they make any on any way down. felice navidad
    25 Dec 2013, 01:22 AM Reply Like
  • Kamil Kolacek
    , contributor
    Comments (813) | Send Message
     
    Playing 'the Greater Fool Game' can be dangerous, but also very lucrative if timed accurately!
    25 Dec 2013, 11:39 AM Reply Like
  • psychological-dividends
    , contributor
    Comments (777) | Send Message
     
    The ultimate business test is the test of time. Let's see in 10 years how it all looks.
    25 Dec 2013, 10:13 AM Reply Like
  • stoj
    , contributor
    Comments (430) | Send Message
     
    An extra Merry Xmas, to Twitter
    25 Dec 2013, 04:58 PM Reply Like
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