Seeking Alpha

Twitter cut to Sell at Macquarie; off 2.8% premarket

  • The Twitter (TWTR) rocket ship takes a pause in premarket trade, off 2.8% amid a downgrade to Sell from Macquarie's Ben Schachter.
  • "We expect this to be among the shortest downgrade note you’ve ever read, as nothing fundamentally has changed since our Neutral initiation on Dec. 11, except that shares have risen 40% ... [Twitter] has a bright future and many opportunities ahead. However, as a stock, we believe nothing has changed over the last 15 days to justify the rise in valuation."
  • He maintains his $46 price target.
Comments (63)
  • RTN
    , contributor
    Comments (62) | Send Message
     
    TWTR Initial offering price was 26$ on nov 7th 2013 ...

     

    Macquarie first to downgrade twitter:

     

    Too Far, Too Fast; Downgrade to Underperform; See fair value at $46/sh - Macquarie

     

    -We expect this to be among the shortest downgrade note you’ve ever read,' Macquarie says

     

    -We believe nothing has changed in the fundamentals to justify the sharp rise in shares over the past few weeks - Macquarie

     

    -Estimate differences between underwriters and others could limit upside to consensus - Macquarie

     

    -Many opportunities, but will take time and additional headcount (i.e. costs will go up) - Macquarie

     

    -We expect many other analysts will quickly have to either justify raising targets (based on little new info) or downgrade - Macquarie

     

    Bloomberg graphic eye-popping on multiple vs enterprise value:
    GOOG 12x
    FB 23x
    NFLX 38x
    And
    TWTR 301x
    27 Dec 2013, 08:25 AM Reply Like
  • samuel_liu
    , contributor
    Comments (2768) | Send Message
     
    how much are analysts leaders rather than laggards to the news and stock price
    27 Dec 2013, 08:34 AM Reply Like
  • mitrado
    , contributor
    Comments (1916) | Send Message
     
    And you forgot $LNKD, the king of P/E ! :-D
    27 Dec 2013, 12:06 PM Reply Like
  • Kamil Kolacek
    , contributor
    Comments (726) | Send Message
     
    Exactly. Little to no value added. They are the epitome of wag-the-dog.
    28 Dec 2013, 03:50 PM Reply Like
  • Mark Krieger
    , contributor
    Comments (3677) | Send Message
     
    buy the dip? does the downgrade represent a buying opportunity for those wanting to get long without having to chase the shares into new all time high territory? Will the $70 mark hold?
    27 Dec 2013, 08:33 AM Reply Like
  • BuyToSell
    , contributor
    Comments (215) | Send Message
     
    69 seems to be the floor right now
    27 Dec 2013, 10:22 AM Reply Like
  • Common Sense Logic Investing
    , contributor
    Comments (2) | Send Message
     
    I read this statement before looking at the chart and I gotta say that's the dumbest thing I've ever heard, how could you possibly know what the floor is on a stock that's so young and has ridiculous price fluctuations since its inception... just foolish
    28 Dec 2013, 05:28 AM Reply Like
  • BuyToSell
    , contributor
    Comments (215) | Send Message
     
    agreed. it was a premature statement.
    28 Dec 2013, 12:43 PM Reply Like
  • Kamil Kolacek
    , contributor
    Comments (726) | Send Message
     
    I'm looking at selling January 15 Puts at the $30 strike. Lot's of cushion and margin-of-safety there.
    28 Dec 2013, 03:51 PM Reply Like
  • 81george
    , contributor
    Comments (181) | Send Message
     
    OK, TWTR will now gain just a measly 2% on bad news rather than usual 5-6% daily gain. LOL
    27 Dec 2013, 08:55 AM Reply Like
  • toosmarttofail
    , contributor
    Comments (456) | Send Message
     
    You sound like someone who will take it in stride if the stock loses three-quarters of its value from here.
    27 Dec 2013, 08:59 AM Reply Like
  • MichaelZZ
    , contributor
    Comments (232) | Send Message
     
    What??????????

     

    Do they mean that "trees don't grow to the sky"?????

     

    Say it ain't so!!!!

     

    mz
    27 Dec 2013, 09:03 AM Reply Like
  • Chris Lau
    , contributor
    Comments (1482) | Send Message
     
    I doubt a single analyst could slow the acceleration in the share price, but Twitter (TWTR) now has a market cap larger than 80% of all S&P 500 companies.
    27 Dec 2013, 09:15 AM Reply Like
  • Mark Krieger
    , contributor
    Comments (3677) | Send Message
     
    Chris: but isn't its expected sales and earnings also greater than 80% of the S&P 500 members?
    27 Dec 2013, 09:20 AM Reply Like
  • Chris Lau
    , contributor
    Comments (1482) | Send Message
     
    Mark, (AMZN) might be a better comparable. High multiples, flat to negative margins, but much value attributed elsewhere. For Amazon it is data centres. For twitter it's data mining, targeted adverts.
    27 Dec 2013, 09:54 AM Reply Like
  • ReligiousWacko
    , contributor
    Comments (672) | Send Message
     
    its certainly "possible" that Twitter could justify current mkt cap IF all the dream scenarios play out. It becomes dominant advertising platform with well targeted ads, etc. However, what would that imply? Lower revenues by GOOG and FB along with maybe smaller players like YELP? Unless one really believes the value of advertising will be like 100x of today ...

     

    There could be a company in this space that eventually justifies current valuations with actual earnings but as an aggregate, there is a massive bubble.
    27 Dec 2013, 03:40 PM Reply Like
  • alext1379
    , contributor
    Comments (697) | Send Message
     
    I believe its overvalued but might as well profit now while you can. Options premiums are crazy at the moment. Sellings CALLs with an offsetting PUT as insurance against a catastrophic correction. Making decent coin on weekly options and if it gets exercised, a good return. Only wish I wasn't so negative at the beginning and bought in at $45 rather than putting my money in FB which stagnated...until after I sold of course.

     

    Definitely a short term play though. Jan 18th CALLs have an insane volume (more than double today's volume) at $85 strike so I'm sure the market manipulators will pump it up again to profit from the calls.
    27 Dec 2013, 09:21 AM Reply Like
  • june1234
    , contributor
    Comments (2330) | Send Message
     
    Like amzn and nflx people like and use twitter, no surprise TWTR trades like the other 2 also
    27 Dec 2013, 09:47 AM Reply Like
  • 81george
    , contributor
    Comments (181) | Send Message
     
    I was lucky to get out at 74. The next big move will be the day they report Q4. Until then the range 68-72
    27 Dec 2013, 10:18 AM Reply Like
  • Kamil Kolacek
    , contributor
    Comments (726) | Send Message
     
    Do you happen to know when that day is? I want to put it into my calendar already.
    28 Dec 2013, 03:53 PM Reply Like
  • benitus
    , contributor
    Comments (1871) | Send Message
     
    IMHO, TWTR is a bubble waiting to burst and innocent blood will flow; those who are greedy enough to follow the big-money players to push the market up, which will continue as long as they feel that there is more blood on the street for them to feed on. Once the momentum stops or slows down enough for them to book their flight out, they will dump the stock and turn it around by heavy shorting. It will not be a steep drop, like it was going up, because they will be testing the market, to feel the pulse whether support is still forthcoming. Eventually, when innocent blood has been burned enough, the support will dry up and then, the avalanche will come. That is what the analysts are talking about.

     

    Any bubble cannot keep on growing. It has to burst eventually. When that happens, the bloodletting will begin because the big-money people has been making billions through stocks like TWTR, GMCR and some other wild-cards and they have very deep pockets to push the price up whenever they feel like doing so. Then, other big-players will jump on board and that's when innocent blood gets greedy and pawn everything they have to get into the game, which can only have one sad and inevitable ending, viz. total destruction, period.

     

    My advice for those who are already out, is to stay out and look elsewhere to play with their profits, instead of giving up their profits by being greedy and coming back in. The bubble has to burst and the ensuing downward spiral may take one or two months before it will stabilize. That's when the bog-money people has gone to hunt elsewhere. My GUESS (which is purely fiction) is that it will eventually settle around $40 within the next six months. So, venture into TWTR at your own risk because the avalanche may happen sooner rather than later.

     

    The bottomline is that TWTR is an empty shell and presently incapable of generating any significant revenue stream. In fact, its substantial growth over the past two weeks has confounded many brave gamblers like myself because there is no reason for its continued growth other than covering for early shorts, so something unholy is happening, which must end eventually. Stay out of the open-graves being dug for greedy people. I shudder to think of the potential suicides when the collapse does go down.
    27 Dec 2013, 11:16 AM Reply Like
  • samuel_liu
    , contributor
    Comments (2768) | Send Message
     
    "TWTR is an empty shell"

     

    I' m in China, and am able to get out my tweets, even if I can't access nytimes.com, bloomberg.com, nor Facebook.com, or twitter.com
    27 Dec 2013, 11:47 AM Reply Like
  • 81george
    , contributor
    Comments (181) | Send Message
     
    Interesting... Taking into account the fact that TWTR is banned in China.
    http://reut.rs/1hJJagS
    27 Dec 2013, 12:49 PM Reply Like
  • samuel_liu
    , contributor
    Comments (2768) | Send Message
     
    Again I get out my twitter posts, but even in the USA Feb-Apr 2012 couldn't get too involved in it. But I do chronicle my life on SA.

     

    I don't use any firewall evading s/w either. I would like to read NYTimes and bloomberg articles.
    27 Dec 2013, 12:54 PM Reply Like
  • benitus
    , contributor
    Comments (1871) | Send Message
     
    Samuel, being able to tweet from every corner of the globe doesn't mean it's a good stock. Anyone with some knowledge of the stock would agree that TWTR is a bloated bubble waiting to burst. All it needs is a prick. Remember the dotcom bubble? It had sent many brave souls (or idiotic morons) to their early graves. Those who survived are those who got out early or stayed out entirely. Of course, the big-money people or the market manipulators were the ones who laughed themselves to the bank at the poor fools who littered the trail with their corpses. Trading options on TWTR is another way to pump up the bubble. Remember the old adage, "the higher it goes, the faster it falls", so please don't get burned. Walk away, if you can. There're less insane ways to make money, and without being dashed to pieces. (P.S. when I made my earlier comments, TWTR was only swaying down but now, it has collapsed and will come down $8 before it catches its breath, so be forewarned, as it will continue or resume its slide even if some brave souls prop it up again).
    27 Dec 2013, 03:25 PM Reply Like
  • samuel_liu
    , contributor
    Comments (2768) | Send Message
     
    I appreciate the service (utility), of course valuation is different.

     

    TWTR is indicative of the overvaluation of the S&P500 ...

     

    I fell asleep again.
    27 Dec 2013, 08:45 PM Reply Like
  • Tales From The Future
    , contributor
    Comments (3664) | Send Message
     
    "He maintains his $46 price target."

     

    Even that is extremely high in my opinion.

     

    At maybe $10-15 TWTR makes some sense to me valuation-wise, but not above that.

     

    I added a TWTR short yesterday for the first time.
    27 Dec 2013, 12:19 PM Reply Like
  • mitrado
    , contributor
    Comments (1916) | Send Message
     
    I wouldn't short it. Remember $LNKD? It only has a P/E of 724.92 and from the looks of it, it won't come down.
    27 Dec 2013, 12:26 PM Reply Like
  • Mark Krieger
    , contributor
    Comments (3677) | Send Message
     
    mitrado: LNKD won't come down?...It has already fell 16% from $257 to $216...doesn't that qualify for coming down?
    28 Dec 2013, 08:22 AM Reply Like
  • mitrado
    , contributor
    Comments (1916) | Send Message
     
    No, just a simple correction... and a pretty soft one. A real drop would put $LNKD below $100, at the very least.
    30 Dec 2013, 03:28 AM Reply Like
  • benitus
    , contributor
    Comments (1871) | Send Message
     
    mitrado: eventually it would continue falling, as all rocket launches must. Can't stay in orbit forever. May even be sooner than you think, especially if there are other stocks for the gamblers to play with. I would even venture to say that the recent drop of 16% has been due to profit-taking and other new rising stars for the gamblers to focus on. Those who're hoping for LNKD to stay high must hope for more gamblers to take greater interest in it, like having LNKD provide savory sound-bites for the gamblers to chew on. As I see it, interest by gamblers has waned and the stock can only come down to earth, maybe to $100 or below like you said. Be careful, don't piss off the gamblers or market manipulators, who are the real players on the stock markets, or else, they'll go play elsewhere.
    30 Dec 2013, 08:40 AM Reply Like
  • divinecomedy
    , contributor
    Comments (466) | Send Message
     
    TWTR is coming down because I bought some yesterday. I should do more and buy a hella ton of put options.
    27 Dec 2013, 12:45 PM Reply Like
  • samuel_liu
    , contributor
    Comments (2768) | Send Message
     
    TWTR Puts sound healthy
    27 Dec 2013, 12:46 PM Reply Like
  • alext1379
    , contributor
    Comments (697) | Send Message
     
    It is a pullback but I am confident that it will rise again and approach $80 if not higher near the end of January.

     

    Yesterday's CALL volume at $70 was 16K and $75 was 26K. The volume for Jan 18 $85 was 86K yesterday.

     

    I can see the manipulators buying $70 calls and them pumping up the price to excercise and sell while picking up PUTs at a lowered price to see them rise today. This is why I believe TWTR will rebound and head for $80 if only temporarily.

     

    My advice for anyone still in and doesn't want to get out is to sell a call but also buy a lower put that will limit your losses on a crash, in which case you'll come as close to breakeven as possible.

     

    I myself won't be holding TWTR after January because yes, it is a bubble that's being pumped.

     

    Most tech stocks are down today so the pullback is probably due to about $3 market and $3 manipulator. Wouldn't surprise me if it turned around as fast as Monday.
    27 Dec 2013, 12:52 PM Reply Like
  • MichaelZZ
    , contributor
    Comments (232) | Send Message
     
    I have sold 85 calls and 50 puts.

     

    mz
    27 Dec 2013, 01:14 PM Reply Like
  • samuel_liu
    , contributor
    Comments (2768) | Send Message
     
    congratulations!!
    27 Dec 2013, 01:19 PM Reply Like
  • alext1379
    , contributor
    Comments (697) | Send Message
     
    TWTR CALL open interest for $80/$85 and $90 strikes on Jan 18th is 130k contracts. TWTR will definitely recover into the 70s.

     

    Add the $95 strike and open interest hits 170K contracts.
    27 Dec 2013, 01:35 PM Reply Like
  • Tales From The Future
    , contributor
    Comments (3664) | Send Message
     
    "TWTR will definitely recover into the 70s."

     

    I'm not sure about that come January 2014, there were a lot of window dressing buys. A few more bad days for TWTR and a stampede will kick in...especially if it falls under the public IPO day price again.

     

    The volatility is crazy for the market cap. I only started a small short position at $74 so far.
    28 Dec 2013, 03:35 AM Reply Like
  • 81george
    , contributor
    Comments (181) | Send Message
     
    TWTR right now looks ugly -8% 67.3
    27 Dec 2013, 01:54 PM Reply Like
  • alext1379
    , contributor
    Comments (697) | Send Message
     
    But it can also rise the same amount which is far from ugly. IPO practically doubled on opening day and hasn't really gone below that. Expensive and volatile stocks aren't for the faint of heart because they're usually the ones who get eaten.
    27 Dec 2013, 02:27 PM Reply Like
  • 81george
    , contributor
    Comments (181) | Send Message
     
    Got even uglier -10% 65.8. Comes early 2014 will be more fund selling. Take all the profits while still can...
    27 Dec 2013, 03:19 PM Reply Like
  • alext1379
    , contributor
    Comments (697) | Send Message
     
    As long as it stays within $10 range, no need to panic as most losses can be recouped through options. Some tax selling I'm sure as well. Also, its only a loss when you sell. Once price stablizes, can still make money back via options.
    Have to wait for Monday to see if trend continues, don't want to sell a CALL and have the price do a 180 and call your shares away.
    27 Dec 2013, 03:36 PM Reply Like
  • benitus
    , contributor
    Comments (1871) | Send Message
     
    Yes, 81george, only those smart enough to avoid being greedy will get to enjoy their profits. The death-knell has sounded!! Every man for himself. The gravy train has gone to dust. If you watch the tickers like I did, each time it came down to a new low, up pops some brave souls (or idiots) who pushed it up again before it went down even further. My advice to those itching to get into TWTR (probably dreaming of new heights) is to wait until the dust settles, even if you dare to get in but do so as day-traders do, viz. clear the decks every day, rather than to hold it overnight.
    27 Dec 2013, 03:38 PM Reply Like
  • alext1379
    , contributor
    Comments (697) | Send Message
     
    Can always lower your avg once the floor is reached, no point in buying while everyone is headed for the exits as you'll get burned.

     

    Depending on how the market goes next week, can sell CALLS and wait for drop to close out at virtually nothing, then sell another call and repeat. I believe a $5-6 strike above current price is a good cushion to work with.
    27 Dec 2013, 03:47 PM Reply Like
  • Mark Krieger
    , contributor
    Comments (3677) | Send Message
     
    $45 target? At the rate the stock is falling, it just might reach that target today.
    27 Dec 2013, 03:31 PM Reply Like
  • alext1379
    , contributor
    Comments (697) | Send Message
     
    Have a feeling that traders are using today's downgrade as a reason to cash in and possibly trigger auto sells. Other analysts have said the same thing but the stock has never reacted with this extreme.

     

    Only the market makers know I suppose.
    27 Dec 2013, 03:38 PM Reply Like
  • leopardtrader
    , contributor
    Comments (738) | Send Message
     
    Many people still dont get the enviable global all comer platform called twitter. In fact Twitter is sitting on a gold mine with several ways to monetize user base far ahead of the competition. Until the stock gets to $200 in months to come would many now begin to actually start putting 2 and 2 together. As Carl Icahn says " Some people get rich studying artificial intelligence. Me, I make money studying natural stupidity."
    This Twitter selloff is a compelling opportunity for patient minds
    27 Dec 2013, 03:39 PM Reply Like
  • 81george
    , contributor
    Comments (181) | Send Message
     
    You can fool some people some time but you can't fool all the people all the time. Great Bob Marley. Enough said.
    27 Dec 2013, 03:46 PM Reply Like
  • alext1379
    , contributor
    Comments (697) | Send Message
     
    Today's drop is shocking, as has been this month's rise. If you take the share price out of the equation. What other stock offers a triple digit premium on options? FB doesn't, Apple does but at nearly 10x the price.

     

    If you bought in low, good job, I wish I had have. if you bought in higher like me, don't blink and just sell options. If they get called away, your losses won't be as bad as if you cut and run as the options will lower your losses and over time, more than cover them. TWTR is good as its contracts are weeklongs.

     

    Next week is a new week so no point dwelling. An example, my CALL option that expires today basically erased $4/share loss. Next week, depending on how the market goes, can repeat or wait for the rebound.

     

    If TWTR returns to its $45 roots, will just buy another lot and bring the average down and sell even higher premiumed calls.
    27 Dec 2013, 03:54 PM Reply Like
  • benitus
    , contributor
    Comments (1871) | Send Message
     
    Whether TWTR will continue being sold down will depend on the overnight market, which is crowded with big-players. It'll be a battle between those who see the selloff as a buying opportunity and those who see it as a prelude of worse things to come. If the selloff continues tonight, there will be a blood-bath tomorrow, as many of those who jumped onto the bandwagon from $60 are walking on egg-shells and many will lose their nerves and abandon ship before they lose all their profits if the slide continues tomorrow. Most of the volume movements in the past three weeks came in after $60, initially comprising of short-covering but later joined by those who smelled blood. Unless there's an avalanche today or tomorrow, I believe that the decline will pause at some point to catch its breath and at which time, opportunists or big-money manipulators may think that it's time to get back into the game and attract fresh blood back in, especially those who got out early with some tidy profits. Then the price will climb again but slower than before. If the volume didn't materialize as expected, then the slide will resume and now, those greedy idiots who got back in will lose their pants and stay away for good. So, the saw-tooth see-saw will prevail for some time, each time dipping lower than before, before it gets to be the avalanche that will happen eventually, if it hasn't happened already.
    27 Dec 2013, 04:04 PM Reply Like
  • alext1379
    , contributor
    Comments (697) | Send Message
     
    Well, does "worse things to come" mean a return to the $45 range or worse. If its back to $45, atleast we know the floor and can work with it.
    27 Dec 2013, 04:22 PM Reply Like
  • benitus
    , contributor
    Comments (1871) | Send Message
     
    Yes, alex... Undoubtedly, those who fear the bubble being burst soon or the impending avalanche will hesitate to buy into this stock. Without the support necessary to feed on fresh blood, the vultures will retire and head for the woods, once they're convinced that the blind support necessary for their feeding frenzy has evaporated and that, my friend, will begin the return back to earth, which will surely go below $45 eventually. I won't come in until it's back below $40 but I may test the waters and make me some money if it hovers in the 40s.
    27 Dec 2013, 05:50 PM Reply Like
  • 81george
    , contributor
    Comments (181) | Send Message
     
    Closed on dec 24th. Until dust settles and TWTR reports Q4 nothing doing. It may be 200 some day, but it may come down to 20 too. Devil is in the numbers.
    So far so good. Happy New Year all!
    27 Dec 2013, 04:22 PM Reply Like
  • tawse57
    , contributor
    Comments (707) | Send Message
     
    Twitter is the Emperor's new clothes when it comes to revenue generation IMPO. The longer it can put off generating a single dollar in profit the long it can keep the illusion alive that it is worth 70 bucks a share.

     

    As soon as they try to make money from twitter it will be clear to see that they cannot - well, not the tens of billions that the company is apparently worth anyhow IMPO - and the stock will crash.
    27 Dec 2013, 04:35 PM Reply Like
  • benitus
    , contributor
    Comments (1871) | Send Message
     
    Fully agreed, tawse... It's unimaginable how TWTR can generate the kind of revenue that would make it worth above $70 or even $60 or $50 for that matter. Eventually, the bubble will burst and those who hope for something out of nothing will drown in misery.
    27 Dec 2013, 05:58 PM Reply Like
  • Rootarmo
    , contributor
    Comments (170) | Send Message
     
    I think its fair to say that if we knew the stock was going to go from 39 to 74 in a matter of weeks we would have all piled into the stock because - well because who wouldn't.

     

    For those that did, they made a ton of money. Call them lucky, stupid, whatever...they did it and are successful for it. Ultimately, much like real estate, a stock is worth what someone is willing to pay for it. If I knew the stock was going to go to 90..i certainly wouldn't stand on principle and refuse to buy it.

     

    I think to a large extent people are hoping it goes down to validate their reasons for not buying it..but whatever happens..you just watched a well known, highly publicized stock almost double before your eyes and you missed it.

     

    This includes me as well. Could have been a great score, back to investing the hard way with those wonderful dividend paying stocks at 5% yield...whoopeee !!!
    27 Dec 2013, 06:08 PM Reply Like
  • benitus
    , contributor
    Comments (1871) | Send Message
     
    Ditto, root... but no regrets if we missed the bonanza because there will always be other opportunities that will come along. So, we grow in experience in reading the signs and seizing the opportunity, or basically, indulge in gambling like all speculators do.
    27 Dec 2013, 06:33 PM Reply Like
  • foodforthought
    , contributor
    Comments (217) | Send Message
     
    Based on TSLA's pullbacks in 2013, the probability of TWTR going below $60 is around 85% and going below $57.50 is around 65%.

     

    I would also buy TWTR below $50 as a long-term hold.
    27 Dec 2013, 07:17 PM Reply Like
  • tawse57
    , contributor
    Comments (707) | Send Message
     
    The only way they can make money is sticking clickable ads into the twitter feed - watch the love of twitter dry up when every other tweet in the feed is an ad.

     

    They could try charging a subscription but, again, watch millions walk away from twitter the moment they are asked to pay for it.
    28 Dec 2013, 03:25 AM Reply Like
  • Tales From The Future
    , contributor
    Comments (3664) | Send Message
     
    I think so too. Even FB and YouTube only have around 6 billion in revenue at the moment, I don't see TWTR prove its current valuation fundamentally for years, if at all.

     

    Especially young people might have already jumped on the next network by then.
    28 Dec 2013, 03:40 AM Reply Like
  • benitus
    , contributor
    Comments (1871) | Send Message
     
    tawse57, even though I agree with you fully, I think that there'll always be users for TWTR because it's a simple and convenient platform for short and quick messages, which can be easily broadcast to all and sundry. But that doesn't mean that vast money can be made by TWTR, simply because the ways to monetize its user-base is rather limited, unlike FB. Only when FB was able to monetize its mobile users, was it possible for them to increase their revenue, so now the stock has appreciated significantly but eventually, it will come down. My guess for FB is a long-term price of below $50.
    28 Dec 2013, 04:31 PM Reply Like
  • foodforthought
    , contributor
    Comments (217) | Send Message
     
    THE OFFERING (from S1):

     

    http://1.usa.gov/1lpQw98

     

    People think there are ~544.7M shares O/S. The actual "diluted" shares O/S is ~705M!!!...This is going to be ugly on the lock-up expiration. Not to mention, check out the average exercise price: less than ~$2 across the board!!!

     

    Common stock offered by us: 70,000,000 shares
    Common stock to be outstanding after this offering: 544,696,816 shares
    Option to purchase additional shares of common stock from us: 10,500,000 shares

     

    The number of shares of our common stock that will be outstanding after this offering is based on 474,696,816 shares of our common stock (including preferred stock on an as-converted basis) outstanding as of September 30, 2013, and excludes:

     

    1-) 42,708,824 shares of our common stock issuable upon the exercise of options to purchase shares of our common stock outstanding as of September 30, 2013, with a weighted-average exercise price of $1.84 per share;

     

    2-) 85,657,603 shares of our common stock subject to RSUs outstanding as of September 30, 2013;

     

    3-) 116,512 shares of our common stock, on an as-converted basis, issuable upon the exercise of a warrant to purchase convertible preferred stock outstanding as of September 30, 2013, with an exercise price of $0.34 per share;

     

    4-) 7,202,952 shares of our common stock subject to RSUs granted after September 30, 2013;

     

    5-) 13,178,040 shares of our common stock issued upon completion of our acquisition of MoPub Inc., or MoPub, after September 30, 2013;

     

    6-) 1,237,847 shares of our common stock issuable upon the exercise of options to purchase shares of our common stock that were assumed and converted from options to purchase shares of MoPub common stock upon completion of our acquisition of MoPub after September 30, 2013; and

     

    7-) 80,300,000 shares of our common stock reserved for future issuance under our equity compensation plans which will become effective prior to the completion of this offering, consisting of:
    7.a.-) 68,300,000 shares of our common stock reserved for future issuance under our 2013 Equity Incentive Plan, or our 2013 Plan; and
    7.b.-) 12,000,000 shares of our common stock reserved for future issuance under our 2013 Employee Stock Purchase Plan, or our ESPP.
    28 Dec 2013, 09:44 PM Reply Like
  • foodforthought
    , contributor
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    From 424B4 dated 11/7/13:

     

    http://1.usa.gov/1gz0iph

     

    TWTR generated $112,247 of revenue in 4Q:12 ($316,933 (full year 2012) - 204,686 (9-months ended 2012). Hence, TWTR generated 35.42% of its revenue in 4Q:12. Applying this forward to 2013, we get 2013 revenue estimate of ~$654M. (9-months ended 2013 revenue divided by the reverse of the 35.42%: $422,215/(1-0.3542) = $654M)

     

    $654M implies a growth of ~107% in 2013. Being generous, let's assume TWTR doubles its revenue stream again in 2014 to ~$1.3B. And, let's assume again a generous 85% revenue growth in 2015 (for those asking why 85%; don't forget of law of large numbers). That will give us 2015 revenue estimate of ~$2.42B.

     

    Now is the tricky part. At the high end of estimates, FB will be growing its revenue base by ~40% in 2015. TWTR's 85% revenue growth estimate in 2015 is 2.125X (85/40) that of FB's. FB is currently trading at 8.5X its 2015 revenue estimate. Applying 2.125X to 8.5X, we get a "very generous and aggressive" 2015 P/S multiple of ~18X for TWTR.

     

    18X multiple applied on 2015 revenue estimate of ~$2.42B yields a market cap of ~$43.56B. Diluted O/S shares is ~704M shares (and will be much higher in 2014 and 2015!) That implies current share price of ~$62. Of course, we can always argue "10% premium" on top of our very aggressive growth assumptions due to "scarcity value" for TWTR shares (float is only ~80M shares). That would imply a current share price of $~68.

     

    So, who is willing to pay $68 for TWTR or more? If more, what are your assumptions?
    4 Jan, 01:14 PM Reply Like
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