It's been awhile since I updated my chart on the corporation that specializes in hemorrhaging money, otherwise known as Twitter. They have continued their losing ways since they were incorporated, and since they went public. Today's earnings press release shows a loss of $162 million on revenue of $436 million. It costs a lot of money to handle 140-character text messages in this day and age. They also lowered projected earnings for the rest of the year.
The stock crashed after earnings (like it does after every miserable release), but the company is still valued at over $26 billion!?! Twitter is an amazing machine and while they have never and probably never will make any profit, they have mastered this sleight of hand:
1. Issue hundreds of millions of worthless stock shares
2. Sell stock to stupid investors
3. Pay employees with (temporarily) valuable stock
4. Lose hundreds of millions of dollars each quarter
5. Rinse, repeat
How do they do that? In DotCom 1.0, it was all about eyeballs. Twitter uses the term "Monthly Active Users (MAUs)" which is the same as, well, eyeballs! The more snake oil changes, the more it stays the same. Twitter stock owners can take solace in the ringing endorsement 4 days ago by Jim Cramer. Cramer thinks Twitter has room to run. Bet the farm, go all in, this is easy money. If you already own Twitter, now is the time to BUY MOAR. Hahaha.
Twitter shows the hazards of the Internet IPO
ReplyDeleteTech investors accustomed to the hefty margins generated by Apple, Google and Microsoft don't know quite what to make of Twitter and its $600 million of losses in the past four quarters.
Don't know quite what to make of the losses? You aren't making it any easier! Twitter fritter sounds delicious. ;)
Stagflationary Mark,
DeleteTwitter fritters are deep fried, just like their financial statements. Everything tastes good when it's deep fried.