TWTR’s Stock Value Shows Its Purpose

Posted: November 9, 2013 in Excess and Algorithms
Tags: , , , , ,

eanda logoby @anarchyroll

Twitter went public this week, successfully, take that Facebook! Sure the second day saw a slide of 5.8% but that is barely a drop in the bucket after going up by 73% in its first day of trading.  The lesson is clear, have Patrick Stewart ring the bell during your company’s IPO offering , it’s good luck.

But in all seriousness, TWTR (it’s stock list name) has shown staying and growing power as a company during its first two days as a publicly traded company.  Their IPO isn’t as similar to Facebook as one might think. Facebook had more market value/capital, revenues, and profits than Twitter going into its IPO.  Twitter is still yet to make a profit, which was not the case with Facebook.  So why is its stock performing so well it its infancy?

“We believe that the majority of the world’s 2.4 billion Internet users have great potential to find something or someone on Twitter that they are interested in,” he said. “Because of its critical mass, it should enjoy a competitive advantage for the foreseeable future.” Michael Pachter of Wedbush Securities, an investment firm that set the price of Twitter’s stock at $37 per share.

When I saw that quote my eyes popped, because in much simpler language with a more direct tone, that is usually how I pitch Twitter to my friends.  Pick a subject, topic, taste, hobby, or basically any kind of noun and you can find almost an infinite amount of information about it on Twitter.  The example I usually use is music; every musician in every band of every genre of 6every level of popularity along with their record label, fan club, and industry magazines all have the professional and/or personal Twitter accounts.

Understanding the business model of a product that you believe in then buying at a low price and selling at a high price is the corner stone of Warren Buffet’s model of investing. So if you “get” Twitter and have money to invest, buy now. Twitter is not going anywhere, it is as relevant a product as there is in the world.

Twitter’s slice of the social media pie is that it allows you to be anonymous and doesn’t chain you to your immediate friends and family.  Twitter can be used as an ego centric, gossip creating, social status machine like Facebook.  Unlike Facebook however, Twitter can be a legit breaking news source like the Bin Laden killing. It can connect revolutionaries who want to topple a dictator like in Libya.  Twitter can provide actual news and actual information that can have wide reaching effects on the world, not just on one’s social circle.

And that slice of the social media pie is directly correctly to its stock market value, invest accordingly.

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