Best of the Week
Most Popular
1. Will Gold Price Breakout? 3 Things to Watch… - Jordan_Roy_Byrne
2.China Invades Saudi Oil Realm: PetroDollar Kill - Jim_Willie_CB
3.Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - Nadeem_Walayat
4.The Stock Market Trend is Your Friend ’til the Very End - Rambus_Chartology
5.This Isn’t Your Grandfather’s (1960s) Inflation Scare - F_F_Wiley
6.GDX Gold Mining Stocks Fundamentals - Zeal_LLC
7.US Housing Real Estate Market and Banking Pressures Are Building - Chris_Vermeulen
8.Return of Stock Market Volatility Amidst Political Chaos and Uncertain Economy - Buildadv
9.Can Bitcoin Price Rally Continue After Paypal Fake FUD Attack? - Nadeem_Walayat
10.Warning Economic Implosion on the Horizon - Chris_Vermeulen
Last 7 days
Is a Stock Market Crash Imminent or Does this Stock Market Bull Still Have Legs - 25th Apr 18
Gold Price Focusing on May Cycle Bottom - 25th Apr 18
Cash “Vanishes” From Bank Accounts In Ireland - 25th Apr 18
Is the Malaysian Economy a Potemkin Village - 25th Apr 18
Land Rover Discovery Sport Rattling / Knocking Sounds From Car Pillars - 25th Apr 18
China Takes the Long View on Gold-Silver... and So Should You - 25th Apr 18
Russia Buys 300,000 Ounces Of Gold In March – Nears 2,000 Tons In Gold Reserves - 24th Apr 18
Stock Market Study Shows Why You Shouldn’t “Sell in May and Go Away” - 24th Apr 18
CRYPTOCURRENCY MASTERCLASS #CRY90 - 24th Apr 18
UK Gambling Statistics - What the Numbers Say - 24th Apr 18
Chaos Capitalists Short Countries - How Chanos Got China Wrong - 24th Apr
Artificial Intelligence Defines the Political News Narrative - 24th Apr 18
Stock Market "Oops, They Did It Again" - 24th Apr 18
Fox in the Henhouse: Why Interest Rates Are Rising - 23rd Apr 18
Stocks and Bonds, This is Not a Market - 23rd Apr 18
Happy Anniversary Silver Investors! - 23rd Apr 18
The Hottest Commodity Play In 2018 - 23rd Apr 18
Stock Market Correction Turns Consolidation - 23rd Apr 18
Silver Squeeze, Gold Fails & GDX Breadth - 23rd Apr 18
US Economy Is Cooked, the Growth Cycle has Peaked - 23rd Apr 18
Inflation, With a Shelf Life - 23rd Apr 18 - Gary_Tanashian
Stock Market Predictive Modeling Is Calling For A Continued Rally - 22nd Apr 18
SWEATCOIN - Get PAID to WALK! Incentive to Burn Fat and Lose Weight - Review - 22nd Apr 18
Sheffield Local Elections 2018 Forecast Results - 22nd Apr 18
How Long Does it take for a 10%+ Stock Market Correction to Make New Highs - 21st Apr 18
Sheffield Ruling Labour Party Could Lose 10 Council Seats at May Local Elections - 21st Apr 18
Crude Oil Price Trend Forecast - Saudi Arabia $80 ARAMCO Stock IPO Target - 21st Apr 18
Gold Price Nearing Bull Market Breakout, Stocks to Follow - 20th Apr 18
What’s Bitcoin Really Worth? - 20th Apr 18
Stock Market May "Let Go" - 20th Apr 18
Overwhelming Evidence Against Near Stock Market Grand Supercycle Top - 20th Apr 18
Crude Oil Price Trend Forecast - Saudi's Want $100 for ARAMCO Stock IPO - 20th Apr 18
The Incredible Silver Trade – What You Need to Know - 20th Apr 18
Is War "Hell" for the Stock Market? - 19th Apr 18
Palladium Bullion Surges 17% In 9 Days On Russian Supply Concerns - 19th Apr 18
Breadth Study Suggests that Stock Market Bottom is Already In - 19th Apr 18
Allegory Regarding Investment Decisions Made On Basis Of Government’s Income Statement, Balance Sheet - 19th Apr 18
Gold – A Unique Repeat of the 2007 and How to Profit - 19th Apr 18
Abbeydale Park Rise Cherry Tree's in Blossom - Sheffield Street Tree Protests - 19th Apr 18
The Stock Market “Turn of the Month Effect” Exists in 11 of 11 Countries - 18th Apr 18
Winter is Coming - Coming Storms Will Bring Out the Best and Worst in Humanity - 18th Apr 18
What Does it Take to Create Living Wage Jobs? - 18th Apr 18
Gold and Silver Buy Signals - 18th Apr 18
WINTER IS COMING - The Ongoing Fourth Turning Crisis Part2 - 18th Apr 18
A Stock Market Rally on Low Volume is NOT Bearish - 17th Apr 18
Three Gold Charts, One Big Gold Stocks Opportunity - 17th Apr 18
Crude Oil Price As Bullish as it Seems? - 17th Apr 18
A Good Time to Buy Facebook? - 17th Apr 18
THE Financial Crisis Acronym of 2008 is Sounding Another Alarm - 16th Apr 18
Bombs, Missiles and War – What to Expect Next from the Stock Market - 16th Apr 18
Global Debt Bubble Hits New All Time High – One Quadrillion Reasons To Buy Gold - 16th Apr 18
Will Bitcoin Ever Recover? - 16th Apr 18
Stock Market Futures Bounce, But Stopped at Trendline - 16th Apr 18
How To Profit As Oil Prices Explode - 16th Apr 18
Junior Mining Stocks are Close to Breaking Downtrend - 16th Apr 18
Look Inside a Caravan at UK Holiday Park for Summer 2018 - Hoseasons Cayton Bay Sea Side - 16th Apr 18
Stock Market More Weakness? How Much? - 15th Apr 18
Time for the Gold Bulls to Show their Mettle - 15th Apr 18
Trading Markets Amid Sound of Wars - 15th Apr 18
Sugar Commodity Buying Levels Analysis - 14th Apr 18
The Oil Trade May Be Coming Alive - 14th Apr 18

Market Oracle FREE Newsletter

Trading Lessons

Twitter Bubble Price Crash? An Ad Per Tweet Solution?

Companies / Tech Stocks Nov 08, 2013 - 05:32 PM GMT

By: Nadeem_Walayat

Companies

Twitter that has yet to make a single dime of profit was floated Thursday on the NYSE at $26 per share and immediately saw its stock price soar to close up 73% on the day at $44.90, valuing the company at more than $24 billion.

The obvious comparison for what could happen next to the Twitter's stock price is the Facebook example, which peaked on its IPO day as many rushed to bet heavily on one of the social networking backbones of the internet, dreaming of monetizing on its then 900 million users.


At the time I wrote - 18 May 2012 - FaceBook $100 Billion Internet IPO Emperor Has No Clothes, Investors Could Lose 85%

Facebook in my opinion is a re-run of the lastminute dot com bubble IPO, that saw the value of initial investments all but wiped out. Facebook is probably being priced at X6 its value therefore investors have the potential to sufferer as much as a 85% loss on the IPO before the stock hits bottom.

The expected slump in the Facebook stock price could start as early as today when the stock starts trading.

Hedging Opportunity - Buy Google and Short Facebook

Bottom line - If you want to invest in Facebook, then you will be able to pick up the stock at a fraction of its IPO price in the not too distant future.

How has the Facebook stock price performed since its May 2012 IPO?

The stock price crashed from it's first day close of $38 to just $18 less than 4 months later, a 53% price crash, however this year Fed QE-4-Ever and an monetization blitz has helped to inflate the Facebook stock price to stand at $47.50. The consequences of which has been that the number of 'REAL WESTERN' users has continued to diminish since the IPO as most of the new users are either situated in the developing world, on incomes of less than 1/10th of that in the West, or outright frauds, Likes and Post farms hired to inflate stats, again situated in developing nations such as Bangladesh.

Implications for Twitter are even worse than for Facebook investors because Twitter is even more over valued than that which Facebook was at IPO for Twitter reported a loss of $132mln compared to Facebook's $1 billion at its IPO, but don't worry because Twitter promises that its earnings will some how magically jump from -$134 mln to +$1billion next year, though the only way I can see them coming close to achieving this is if they put up an ad per tweet. In my opinion, in a best case scenario Twitter will be lucky to make $400 million in profit next year which would value the company at 60X earnings, which translates into a potential 50% STOCK PRICE CRASH! And that's my best case scenario.

So just like Facebook before, I expect the Twitter stock price to crash to trade at LESS than 50% of its last closing price ($44.90), the only thing that would prevent such an eventuality is if Twitter ramped up advertising to the rate of an Ad per Tweet!

What about the long-term prospects for Twitter and Facebook ?

Today Twitter says it has 230 million users of which perhaps 100 million of whom are real active users, which means whilst in the future the official number of users will continue to grow, for anyone can create 100's of accounts for themselves, however the number of active individual western users is likely to shrink, the rate of attrition will only become apparent in future years as Twitter will not be able to capitalise upon fake and poor users, because whist the mainstream press is dumb enough to believe the official states, the advertisers usually aren't so dumb as they will see that their ad spending fails to convert into sales because the users that they thought were there are just not there!

So given what happened to past social media giants such as Bebo and Myspace, it is highly probably one, if not BOTH Facebook and Twitter will be trading as mere shells of their former selves with less than 1/100th of the real active users as opposed to the bots, and third world Facebook Likes and Tweet farms.

Source and Comments: http://www.marketoracle.co.uk/Article43043.html

Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2013 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of four ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series.that can be downloaded for Free.

The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules