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My New Stock Play: Twitter

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I've mentioned before that with a small part of my portfolio, I like to invest in individual stocks. In fact, some may say that it more speculation than investing. In the past few months, I've written about investing in SodaStream and IBM. Both have had their ups and downs. As of today, I'm up around 12% on each of them. Not bad for a few months.

Yesterday, I decided to get into Twitter. I should say, get more into Twitter. I had already bought a few shares at around $47, so buying more at $37.50 serves to dollar cost average me down to around $41. When I buy a stock, I send a little note to Evan at Million Dollar Journey. We have good discussions. He made the great point that Twitter feels like 1999, they don't make a profit. I couldn't argue with any of that.

In fact, many of the same arguments were ones that came up when I wrote about Twitter's IPO.

My counter argument may not have been very strong. I suggested that other tech companies have gone from earning no profit to being very profitable. There's an Ebay.com to counter Pets.com. Twitter feels more like an Ebay to me. When I watch a television they are using hashtags. When breaking news about the Patriots is coming down the pike it's from Adam Schefter's Twitter account. Celebrities have bought into Twitter and that's incredibly powerful and valuable.

I hate when people talk about "intangibles". I'm going to have to settle for punching myself in the throat, because the intangibles are huge with Twitter.

The problem I had with Twitter was paying for it when it was a $46 billion dollar company. I have much less of a problem when it is a $21 or $22 billion dollar company. It very well may turn out that I should have paid $10 for a shirt, but it feels better to pay $22 than $46. (Hopefully, I didn't lose too many readers there.)

I understand that Twitter got a lot cheaper because it didn't grow users as much as people had hoped. On the other hand it seemed to grow revenue more than expected. That's got to count for something, right?

So where do you stand? Is Twitter a buy now?

Posted on May 1, 2014.

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6 Responses to “My New Stock Play: Twitter”

  1. Money Beagle says:

    I am not a fan of Twitter stock. I just don’t see their model working for monetization to the scale that would have to justify their market cap. I was pretty skeptical of Facebook at first, and they ended up making enough changes and tweaks to turn things around from the initial perception of things being a disaster, but Twitter just doesn’t seem to have the layers that Facebook does, so I still see Twitter as limited. Just my opinion but at your price, I see more downside risk than upside potential.

  2. Sam says:

    Twitter seems like it is heading for bankruptcy with the way the stock is trading. Nobody expected this.

    I hope the bleeding stops!

    • Lazy Man says:

      I’m going to write more about this tomorrow, but I should have looked up the lock-up periods. That’s was a ridiculously dumb mistake.

  3. Sam says:

    The thing is, all the “pros” knew when the lockup would expire, and didn’t think it would collapse like this.

    Nobody thought it would get this bad. NFLX, SINA, AMZN… really crushing shareholders.

  4. […] week, I excitedly wrote about my new stock play: Twitter. For those who have been following Twitter (pun not intended, but kind of intended), this has […]

  5. […] week, Twitter stock was up 25% after announcing some very impressive quarterly earnings. I had been buying Twitter since the start of May. Thanks to the awesome power of dollar cost averaging, I was about break-even on the day before the […]

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