Seeking Alpha

Twitter co-founders, CEO to keep shares as lockup expiration looms

  • CEO Dick Costolo, chairman/co-founder Jack Dorsey, and co-founder Evan Williams "have no current plans to sell any of their shares" ahead of Twitter's (TWTR +2.6%) May 5 lockup expiration. (8-K)
  • Williams owned 10.4% of Twitter following its IPO, Dorsey 4.3%, and Costolo 1.4%. Shares are down 45% from a post-IPO high of $74.73, but still up 58% from their $26 IPO price.
Comments (33)
  • vpg999
    , contributor
    Comments (121) | Send Message
     
    when you know your base case is sell to FB or GOOG for billions why sell? This is not a helpful statement by these insiders.
    14 Apr, 11:02 AM Reply Like
  • phemale60
    , contributor
    Comments (2773) | Send Message
     
    True believers, as am I!
    14 Apr, 11:11 AM Reply Like
  • benitus
    , contributor
    Comments (1898) | Send Message
     
    Indeed, it isn't a helpful statement, just a vain attempt to stave off market expectation of a sell-off after the lockups are released. It doesn't need any of their shares to trigger a sell-off, as they total only 15% in all, but comprising at best 25% of the shares that will be released (I think). All it needs is a sell-off of 20% to trigger a run on the stock, so it's going to be tough to prevent that, unless the management comes up with something substantial to encourage supporters to stay on board after the release.
    14 Apr, 11:22 AM Reply Like
  • 22643611
    , contributor
    Comments (2066) | Send Message
     
    Agreed
    14 Apr, 11:55 AM Reply Like
  • KoacNation
    , contributor
    Comments (50) | Send Message
     
    The idea that FB or GOOG would buy TWTR at these valuations is utterly laughable.

     

    Either company could mimic the TWTR platform in a week and then graduate all their current accts into their new version of twitter and have over 5 times as many accts in an instant.

     

    Or, they could spend $30billion or more to have a fraction of the users I guess.

     

    The best card TWTR has to play is their name and that's it. Not profits, not growth, not a big moat to creating a similar platform etc.

     

    Never confuse the website which is fun and cool, with the stock which values the company at $30billion dollars

     

    To say that the insiders have no "current plans" to sell shares is clearly an effort to calm shareholders. It's sad and pathetic. He wouldn't have to say it if TWTR were $70 and showing growth in every area.

     

    There's no shame in having the market overvalue your company, but to pretend like it's not overvalued . . . well, everyone knows what's really going on here.
    14 Apr, 11:37 AM Reply Like
  • Illuminati Investments
    , contributor
    Comments (3272) | Send Message
     
    FB just bought WhatsApp for $19B, are you saying that service is harder to replicate and/or more valuable than Twitter?
    14 Apr, 01:51 PM Reply Like
  • KoacNation
    , contributor
    Comments (50) | Send Message
     
    That might seem like a decent point, however . . .
    1) That purchase was just as stupid as purchasing TWTR would be
    2) On a price per user basis it would have make TWTR worth much less than $20 a share
    3) Whatsapp users actually use the platform unlike the vast vast majority of twtr users who either never use the service or use it less than 10 times ever

     

    So, not really a good comparison
    14 Apr, 03:02 PM Reply Like
  • Andrei Volgin
    , contributor
    Comments (584) | Send Message
     
    And WhatsApp is growing like crazy, while Twitter is not.
    14 Apr, 03:09 PM Reply Like
  • CDM Capital
    , contributor
    Comments (428) | Send Message
     
    The problem is everyone else has plans to sell their shares. We've all heard this before, "no current plans", in May it would not surprise me if they pull a complete 180.
    14 Apr, 11:38 AM Reply Like
  • Riimpekki
    , contributor
    Comments (79) | Send Message
     
    I bought earlier twitter bear instrument with 5 k euros. I had two reasons. First was ridiculously high valuation and the second one was the massive release of stocks in may. I already have 100% profit. I'm not cashing out before may.
    14 Apr, 11:43 AM Reply Like
  • wil3714
    , contributor
    Comments (1580) | Send Message
     
    Could be the bottom here
    14 Apr, 12:08 PM Reply Like
  • 22643611
    , contributor
    Comments (2066) | Send Message
     
    Could be the top as well.
    14 Apr, 12:12 PM Reply Like
  • wil3714
    , contributor
    Comments (1580) | Send Message
     
    Yeah ok been cut in half, and execs arent selling
    14 Apr, 01:05 PM Reply Like
  • 22643611
    , contributor
    Comments (2066) | Send Message
     
    Cut in half but worth way less and execs don't have a very l;arge % of the
    half billion shares about to be unleashed
    14 Apr, 05:22 PM Reply Like
  • wil3714
    , contributor
    Comments (1580) | Send Message
     
    If it was $70 before why sell now at potential bottom, thats just stupid. I'm sure they arent that stupid or they have advisers that will tell them.

     

    If its expensive then what is true value then?
    14 Apr, 06:11 PM Reply Like
  • 22643611
    , contributor
    Comments (2066) | Send Message
     
    $9 thereabouts. Not saying it goes that low but thats about what its worth.

     

    I shorted first at $65 then again at $44.55.
    It's been going down since late Dec.
    14 Apr, 08:11 PM Reply Like
  • wil3714
    , contributor
    Comments (1580) | Send Message
     
    Your basically telling me they are worth $5B. Your going to get killed than. Based on float now, you havent seen a flush yet. Looking at the fundamentals its never going to break $26 for sure.
    14 Apr, 08:22 PM Reply Like
  • Andrei Volgin
    , contributor
    Comments (584) | Send Message
     
    $5bn is a lot of money for a company that may never be profitable (using the honest, GAAP basis).
    14 Apr, 08:40 PM Reply Like
  • 22643611
    , contributor
    Comments (2066) | Send Message
     
    Well...I won't get killed because if it goes up I cover and take my profits.
    That said I have watched TWTR closely since the IPO and the interest is gone.
    Look at the historical volume charts.
    In the past when a bevvy of news came out (even the most insignificant) TWTR would shoot up on the shorts getting squeezed. Those days are long gone which is why I am comfortable with my short position.
    Upgrade the other day and nada. Endless news releases since this morning that the insiders aren't selling - an up day for the Nas and meh.
    In regard to the insiders not selling - not a big deal as they account for a small % of the coming float. And how would it look if they were selling?
    That stock would be in single digits in the blink of an eye.

     

    Now all this is just my opinion but I do form my position from actual facts such as new members slowing each qrtr. as well as member usage slowing.

     

    I am of the opinion this stock has platued and as social media has been selling off for more than six weeks it doesn't look good for TWTR
    14 Apr, 08:50 PM Reply Like
  • wil3714
    , contributor
    Comments (1580) | Send Message
     
    Andrei Volgin

     

    What about AMZN? they dont make much. This is finance, not accounting.
    14 Apr, 09:16 PM Reply Like
  • 22643611
    , contributor
    Comments (2066) | Send Message
     
    TWTR is not AMZN. Why would you compare the two?
    15 Apr, 06:32 AM Reply Like
  • wil3714
    , contributor
    Comments (1580) | Send Message
     
    14.6% EB/EV yield simllar ROI
    15 Apr, 07:04 AM Reply Like
  • 22643611
    , contributor
    Comments (2066) | Send Message
     
    Different business - completely different.

     

    Ridiculous to compare them.
    15 Apr, 07:24 AM Reply Like
  • wil3714
    , contributor
    Comments (1580) | Send Message
     
    not on valuation, no problem in actually reinvesting money back into the company
    15 Apr, 03:50 PM Reply Like
  • 22643611
    , contributor
    Comments (2066) | Send Message
     
    The bounce back in momentum stocks may be short-lived, even as the S&P 500 continues to recover from last week’s selloff, according to a recent note from Goldman Sachs.

     

    The Nasdaq Composite Index COMP +0.99% rose above 4,000 on Monday after last week’s rout, with tech stocks like Google Inc. GOOG +2.05% , Facebook Inc. FB +1.81% , and Twitter Inc. TWTR +3.62% rallying.

     

    Goldman analysts looked at 46 instances where momentum stocks ran out of gas and found that on average, the S&P 500 recovered while momentum stocks maintained their negative trajectory. Goldman Sachs notes:

     

    “Historical experience suggests the S&P 500, but not momentum, will likely recover during the next few months. Following the drawdowns, S&P 500 posted a 6-month return averaging +5% and delivered a positive return 70% of the time. Momentum declined by a further 4% on average, and 60% of the time the stocks posted a negative return.”

     

    Goldman Sachs, however, is not forecasting the kind of meltdown in tech and momentum stocks that was seen with the bursting of the dot-com bubble in March 2000.

     

    “We believe the differences between 2000 and today are more important than the similarities and the recent momentum drawdown is unlikely to precipitate a more extensive fall in share prices.”

     

    Such differences include less-dramatic 3- to 5-year returns now, valuations that are less stretched, a more balanced market, earnings-growth expectations that are far less aggressive, lower interest rates, and fewer initial public offerings.
    14 Apr, 12:14 PM Reply Like
  • 22643611
    , contributor
    Comments (2066) | Send Message
     
    As of Twitter’s most recent proxy statement earlier this month, Williams was the company’s largest individual shareholder, with 9.4%. Dorsey holds 4%, Costolo 1.4%, and Benchmark Captial 5.4%. Entities associated with Rizvi Traverse (14.4%), JP Morgan (8.4%), and Spark Capital (5.5%) were not included in this announcement.

     

    So about 28% of institutional investors are not making any such statement in regard to not selling.
    14 Apr, 12:42 PM Reply Like
  • KoacNation
    , contributor
    Comments (50) | Send Message
     
    With all due respect 222, I've loved your comments here for many months, and while I agree with the point you're trying to make, I think a more fair last sentence would be "20.8% of insiders shares have apparently agreed to not sell in May, leaving only 79.2% of those 450 million shares available for sale, which is plenty to cause TWTR to collapse"

     

    Those guys can afford to wait, I read the smallest holder of those on the 8K today held $400 million worth, and the two founders are each over $1billion each in value

     

    However, I don't think the 32 year old programmer with 100,000 shares who is sitting on a once-in-multiple generations jackpot can or will wait to sell, and who wouldn't dump em all if you're that guy/girl?

     

    Further, the earliest bankrollers of TWTR are not in it for the glory of TWTR, they want to get paid, and they aren't as likely to wait. TWTR is not their "baby" nor their life's achievement unlike the original guys/girls involved.

     

    Gotta love the drama that's building
    14 Apr, 03:14 PM Reply Like
  • 22643611
    , contributor
    Comments (2066) | Send Message
     
    I agree, should have put it differently.

     

    Twitter's lockup expiration encompasses fully 83% shares outstanding, WSJ says
    The lockup on 489M Twitter shares expires on May 5, says the Wall Street Journal. Despite the recent statement that co-founders Jack Dorsey and Evan Williams, along with CEO Richard Costolo, have no "current plans" to sell shares, the lockup expiration encompasses fully 83% of Twitter's basic shares outstanding or two-thirds of the diluted count, added the Wall Street Journal.
    14 Apr, 05:41 PM Reply Like
  • Riimpekki
    , contributor
    Comments (79) | Send Message
     
    Indeed. Some insiders who has between 10k-100k shares are still at these values having a jackpot. The lower end is getting enough money to pay their children's college and the high end is getting millions. There bound to be a sell off after may fifth.

     

    I would sell if I was a worker in that company. In our company we have a situation where we are going to make huge profits starting this summer because of big cooperation deal. Don't get excited. We are not a public company. If we were and our stock would be high as twitter. I would still sell all though I know the coming good things.
    15 Apr, 10:23 AM Reply Like
  • Andrei Volgin
    , contributor
    Comments (584) | Send Message
     
    Companies make such announcements when they have nothing else to say to stop the stock slide.

     

    The management already knows their Q1 results and the current trends. If these results were great, they could have simply pre-announced them now - or just wait until the earning release.
    14 Apr, 02:32 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4023) | Send Message
     
    They deserve the Captain Edward John Smith Award for gallantry.
    14 Apr, 04:57 PM Reply Like
  • 22643611
    , contributor
    Comments (2066) | Send Message
     
    Not that it's any big deal but $41.95 was not really the high today.
    I was watching L2 and saw the errant trade go off when TWTR was trading around
    $41.40.
    I believe the true high (unless you want to count someone's mistake) was $41.58
    14 Apr, 06:09 PM Reply Like
  • bazooooka
    , contributor
    Comments (2327) | Send Message
     
    At only 10x sales now it must be looking like a "value" stock to som; what a deal. ;)
    14 Apr, 06:21 PM Reply Like
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