If you haven’t been following Twitter (TWTR) since it went public in 2013, you may have missed the 70%+ fall from its all-time high. Since Twitter is a product that has a huge user base among Mainstreetwarriors, it has also been receiving a lot of attention as an investment opportunity. Let’s take a look.
Why Twitter could be a good investment:
- It is priced significantly lower than it historically has been – Since we know that the market once valued it at almost 4x it’s current value, we know that this company has huge upside potential.
- It has a huge existing user base – I could put lots of graphs here about the size of Twitters user base, but unless you have been living under a rock you have probably seen Twitter logos on websites, email signatures, news outlets, and more.
- It has a presence in both Hollywood and sports – Hollywood can’t seem to get enough of the twitter platform. Many shows have live tweet sessions as an industry standard of the voice of the people. Twitters ability to broadcast live sports is also a huge draw for sports fans, especially during NFL season.
Why I’m staying away from Twitter (for now):
The company is looking for changes and the stock is extremely volatile- It is no secret that Twitter is entertaining possible buyout opportunities. The rapid changes in stock price are way too wild for a fundamental investor. In fact, the stock price dropped almost 20% Thursday October 6th after a report indicated Google and Apple were not interested. Could there be a new buyer that drives the price right back up? Absolutely. The concern is that no one knows when that will be and there are only a handful of companies out there that would logically buy a multi-billion dollar social media platform. Until the future of the company becomes a little more defined, the upside benefits are more of a gamble than anything else.
The Bottom Line
I understand why Twitter has been on the watch list of many Mainstreetwarriors. The stock is relate-able, reasonably priced, and has distinguished features that make it possible for buyers to get a massive return. However, because of the unpredictable nature of the stock price, it’s likely that the rumor mill, not the performance of the company will be driving this stock.
What are your thoughts? Can you think of a reason to buy? Comment below!