Global Equities Cautious on Twitter (TWTR) Amid Sale Speculation

September 26, 2016 10:00 AM EDT
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Price: $17.93 -0.55%

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Global Equities is out with some analysis on Twitter (NYSE: TWTR) following speculation of a bid for the company.

Analyst Trip Chowdhry offered the following on Monday:

  • Industry is reaching the tail-end of Social Media Boom...this is as good as it gets including that for FB (Facebook)
    • It is very likely that the Startup bubble will burst around March-April 2017 time frame; and that will depress the Social Media company valuations - including that of TWTR

Two opposing forces in the market:

  • If one is a GOOGL shareholder, you hope GOOGL is not stupid to bid for TWTR before December 31, 2016
    • because the startup bubble has not yet bursted, and valuations have not yet collapsed
    • TWTR acquisition stock price may be in early $20's..i.e. before December 31st
  • However, if one is a TWTR shareholder, you hope that TWTR is not stupid to delay the potential acquisition beyond December 31, 2016....
    • because the startup bubble will start bursting in early 2017, and valuations will start collapsing including that of TWTR
    • In 2017, it will be very difficult for TWTR to even get an acquisition stock price of $10

  • There is potentially only a single bidder for TWTR, which is GOOGL. It is in the interest of GOOGL to look at TWTR acquisition only after the startup bubble bursts in early 2017...

Chowdhry also highlighted come of Twitter's weaknesses:

Fake Id's, Logged Off users, Hate, Bullying..

  • TWTR is no LNKD.
    • On LNKD majority of ID's are genuine, and conversation is professional as not only your boss, but your juniors, your business partners etc are watching you
    • LNKD is a self policing environment
    • Quality of Data on LNKD is exponentially superior to that of TWTR - and Machine Learning models will be exponentially more accurate on LNKD data vs. TWTR data
  • Inflated number of users - a user having multiple ID's on TWTR is rampant
  • Fake followers - Buying followers on TWTR (and also buying Likes on Facebook) is a booming cottage Industry in India, Bangladesh, Nepal, Sri Lanka, Romania, Ukraine etc...

Twitter strengths may include:

  • The best discovery and amplification platform
  • Ideal platform for realtime breaking news
  • Ideal platform for Politicians and Celebrities
  • If Trump wins the elections, a clear validation, that 140 characters is mightier than $140 million


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Twitter, Definitive Agreement, Trip Chowdhry

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