TWTR - Twitter Inc.

[Dexter]

Looks like TWTR shares are down today due to some analyst downgrades and comments.

http://www.marketwatch.com/story/twitters-stock-tumbles-toward-record-low-after-downbeat-analyst-comments-2016-05-24

http://blogs.barrons.com/techtraderdaily/2016/05/24/twitter-has-failed-says-moffettnathanson-no-compelling-reason-to-own-the-stock/?mod=yahoobarrons&ru=yahoo

[Dexter]

The BBC posted this interview today with Jack Dorsey, Twitter's CEO.

http://www.bbc.com/news/technology-36376037

[Mark P.]

Matt,

I appreciate your continual feedback and analysis.  Let me take a few moments to answer your questions that you posed a week or so ago.

1. and 2.  I am not quite sure why the MAU growth has slowed almost to a halt.  Perhaps it has to do with the fact that users feel that Twitter is not changing fast enough and adding new important features that would make the app even better.  However twitter has said that they will no longer count media attachments as part of the 140 character count.  Dorsey has emphasized in recent weeks that stock holders need to be patient and that the innovation will come.  He has also mentioned that soon longer tweets will be allowed over the current 140 character limit.  I think this is a temporary slowdown and with the general president election, and new innovations coming the MAU will increase, along with new ideas to increase revenues.

3.  As of right now some analysts are suggesting that Facebook (FB) can fill the void and replace Twitter.  In my personal opinion with the MAU that Twitter has and the innovation that I feel Twitter will continue to bring, I feel as though FB or any other company will not be able to overtake what twitter provides, which is a quick way to get sports, world, or political news in a matter of seconds or minutes.

I have also been doing a lot of reading about an IPO of Snapchat that is supposedly going to happen in the next year or so.  In my reading they are suggesting that analysts are planning on setting a Market value of $20B when the IPO occurs.  I find that odd since their revenue for last year was under $60MM.  Twitter on the other had over $2B of revenue in 2015 and their current Market CAP is only $10B.

Overall I still firmly believe that twitter will double or triple their market cap within the next 3-5 years, and could happen in as soon as two.  I think it will follow Facebook's trend of falling significantly after their IPO and then rebounding even stronger.  Change is coming, and I think now is the time to get in while their is a large opportunity ahead of achieving significant gains.

http://www.nbcnews.com/tech/tech-news/twitter-making-changes-allow-longer-tweets-n579521

Thanks,

Mark

[Mark P.]

It took over a month of being in the $14 range, but this stock finally broke the $15 mark.

http://finance.yahoo.com/q?s=TWTR

[Dexter]

Mark -- thanks for your thoughtful responses.  And that was a nice bump in the stock price today, wasn't it?  Hopefully you benefited from that.

I found your mention of Snapchat's valuation pretty interesting.  I did some searching and came across this article from Fortune:

http://fortune.com/2016/05/26/snapchat-worth-20-billion/

Basically, Snapchat is still growing like crazy and the company only really tried to make money off their users in the last quarter of 2015.  But the $20B valuation is still amazingly high for this company. 

[Mark P.]

Yes it was definitely a nice bump today.  I didn't read that they only tried to make money in the 4th QTR of last year.  It will be interesting to see how everything shakes out with tech stocks such as Twitter, Facebook, and LinkedIn over the next year, and if an IPO of Snapchat occurs in the near future.

[Dexter]

Here's an article from Bloomberg that compares the daily user numbers of Snapchat and Twitter.

http://www.bloomberg.com/news/articles/2016-06-02/snapchat-passes-twitter-in-daily-usage

[Dexter]

Here's the backstory of the management successions at Twitter.... 

http://www.vanityfair.com/news/2016/06/twitter-is-betting-everything-on-jack-dorsey

It's a pretty interesting read.

[Mark P.]

This was a great read.  Thanks for sharing!

[Dexter]

Hey Mark,

As I was doing some research on TWTR, I came across a series of articles that Aswath Damodaran had written on Twitter.  Mr. Damodaran is a Professor of Finance at the NYU Stern School of Business.  He teaches classes in corporate finance and valuation (primarily to MBAs).

Here's his latest article on Twitter:
http://aswathdamodaran.blogspot.com/2016/02/management-matters-facebook-and-twitter.html

His most current valuation for TWTR is here:
http://www.stern.nyu.edu/~adamodar/pc/blog/TwitterFeb2016.xls

If you're interested in reading his other articles, you can go to his blog and search for Twitter.

Mr. Damodaran has some interesting thoughts about Twitter's business; and it's helpful to see what assumptions he's making in his valuation.