Seeking Alpha

Twitter opens sharply higher, pares gains

  • Even on what's normally a quiet day for equities, Twitter (TWTR +1.5%) gapped sharply higher, but has quickly retraced its steps a bit. The microblogging platform's market cap briefly surpassed $50B, after factoring options and RSUs,
  • At current levels, Twitter trades at 44x 2014E sales. The company is worth ~30% more than VMware, nearly twice as much as LinkedIn and Corning, and almost 3x as much as Seagate and Sony.
  • Previous: Wunderlich sees short-covering, "cult status" fueling Twitter's rally
  • Update (1:25PM ET): Shares are off to the races again; they're currently up 6.1%.
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Comments (19)
  • 81george
    , contributor
    Comments (295) | Send Message
     
    It's either year end profit taking or the market is slowly coming to their senses.
    26 Dec 2013, 10:12 AM Reply Like
  • Mark Krieger
    , contributor
    Comments (4571) | Send Message
     
    get your facts right-TWTR briefly surpassed the $40 b mark, not $50 billion
    26 Dec 2013, 10:18 AM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (1020) | Send Message
     
    No, it passed $50B. The figures provided on many financial sites don't take options and RSUs into account.
    26 Dec 2013, 10:21 AM Reply Like
  • Mark Krieger
    , contributor
    Comments (4571) | Send Message
     
    Good Morning Eric: not sure what you are talking about..YHOO finance takes into consideration the fully diluted share quantity-this includes all stock options, grants, etc. I have a 544,700,000 share count, what is yours?
    26 Dec 2013, 10:34 AM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (1020) | Send Message
     
    Mark, in addition to those 544.7M shares, Twitter had (at the time of its IPO) 42.7M shares issuable via options, 98.8M shares tied to RSUs, 14.4M shares it was set to issue to MoPub shareholders, and (though all of these might not be granted) 80.3M shares reserved for future issuance via Twitter's 2013 equity incentive and employee stock purchase plans.

     

    Even if one fully ignores the 80.3M reserved shares, the options/RSUs put Twitter's share count in the range of 700M.

     

    The details can be found in the S-1:
    http://1.usa.gov/19r9Rac
    26 Dec 2013, 10:50 AM Reply Like
  • Tales From The Future
    , contributor
    Comments (5930) | Send Message
     
    Yes, the upcoming dilution is big. Before 2018, TWTR will have around 750 M shares....this makes TWTR valuation even crazier than it is.
    26 Dec 2013, 12:44 PM Reply Like
  • toosmarttofail
    , contributor
    Comments (615) | Send Message
     
    TWIT will ultimately go the way of AOL and all the other "Studio 54" type sites.

     

    When content providers start making more than infrastructure companies, the bubble will be over. LinkedIn has paid subscribers, while NFLX and AMZN sell real things. TWIT is just a popular website, nothing more, all dependent on users and popularity, with the next decade of optimism already priced in.

     

    It's an elevator stock: enjoy the ride up, and hope you get off before it crashes, which it inevitably will.
    26 Dec 2013, 10:25 AM Reply Like
  • tomlos
    , contributor
    Comments (1229) | Send Message
     
    I don't understand why anyone other than traders looking for a quick gain would ever buy TWTR as an investment..... Unreal. I'll take XOM for the long haul all day long. Then again, to each their own objectives.
    26 Dec 2013, 10:28 AM Reply Like
  • aow
    , contributor
    Comments (144) | Send Message
     
    Well I think you hit the nail on the head. I'd say quite a few of the investor now are people focused on short term gains while others are likely retail investors new to the market who are hoping (no doubt in vain in the long run) that TWTR will end up being the next FB as opposed to the next myspace.
    26 Dec 2013, 10:38 AM Reply Like
  • BuyToSell
    , contributor
    Comments (236) | Send Message
     
    Seriously, who would want a large short term gain? It's not like you could spend that money on other stocks or anything.
    26 Dec 2013, 11:07 AM Reply Like
  • aow
    , contributor
    Comments (144) | Send Message
     
    People with high income want to avail themselves of low cap gains rate (i.e. need to hold asset 1+ year).
    26 Dec 2013, 11:41 AM Reply Like
  • Mark Krieger
    , contributor
    Comments (4571) | Send Message
     
    the stock is beginning to lag today's robust nasdaq gain. If its relative strength continues to worsen, it might be a clue to opening a short position

     

    I will short if the shares drop south of the $68 threshold.
    26 Dec 2013, 10:46 AM Reply Like
  • BuyToSell
    , contributor
    Comments (236) | Send Message
     
    nah, it was short-term overbought. it will continue to ascend after taking a breather
    26 Dec 2013, 11:22 AM Reply Like
  • TheBonesaw
    , contributor
    Comments (8) | Send Message
     
    44x 2014 sales. Is that a typo or is that based on 2014 estimates?

     

    Also TWTR being valued that high doesn't make any sense to me. I know it has the potential to make money, but does that justify its stock price?
    26 Dec 2013, 10:51 AM Reply Like
  • toosmarttofail
    , contributor
    Comments (615) | Send Message
     
    Want the rally to end? Send me some cash so I can buy the shares, and tell me I can keep the profits.

     

    They don't call me the "rally killer" for nothing. I'm like that guy in the movie "The Cooler."

     

    (Just kidding, no solicitation for funds intended).
    26 Dec 2013, 12:45 PM Reply Like
  • rkw29
    , contributor
    Comments (233) | Send Message
     
    This is the greatest bubble stock since 1999. Unbelievable. It will crash. Who knows when though.
    26 Dec 2013, 11:39 AM Reply Like
  • hneumann
    , contributor
    Comments (632) | Send Message
     
    TWTR stock could have the same fate as FB; goes down under IPO price and then recovers strongly.
    26 Dec 2013, 01:07 PM Reply Like
  • Atkins
    , contributor
    Comments (1050) | Send Message
     
    As I have said repeatedly on SA and elsewhere, Twitter was the biggest "no-brainer" post-IPO buy I've ever seen. The social media IPO frenzy was patently obvious and foreshadowed TWTR's massive outperformance. The mo-mos are making a lot of people a fortune -- saw the same thing in the tech bubble. Hopefully, the mo-mo players know enough to take profits this time around. When Twitter options skyrocket daily, it's time to take money off the table, wait for (one of the few) down days, and then buy more. Working like a charm.

     

    I'm not a mo-mo player, but until the firms head back to the market after the new year, I can't imagine losing money on any of the mo-most.
    26 Dec 2013, 03:04 PM Reply Like
  • Chris Lau
    , contributor
    Comments (2636) | Send Message
     
    Short Twitter once peak confirmed. (TWTR) is mostly bots, SEO "experts", and inactive users. Have 676 followers (0 growth in 2 years): http://bit.ly/K8nDTP

     

    (http://bit.ly/I2oi2V)+ replaces the sharing of my content. 35,500 followers and influences search engine results.
    26 Dec 2013, 04:32 PM Reply Like
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