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re: Twitter IPO
Posted on 11/8/13 at 10:58 am to Lsut81
Posted on 11/8/13 at 10:58 am to Lsut81
They have 60% gross margins
Don't tell me that 100% of the cost of Sales, SGA, and R&D is related to growth.
My point is most companies, they make money selling goods or services at a certain margin then growth by selling more.
Twitter has to grow by figuring out how to make more money with the "assets"(users) it has. Yes they will grow their user base but it won't be anywhere in relation to what they need to grow their revenue and profits in relation to justify their 25 billion dollar market cap.
There users are already valued at higher than linkedin or facebook. So the market things there is more value there. I disagree.
I don't feel like what im saying, that tech ipo's are historically overvalued, is really out in left field.
Don't tell me that 100% of the cost of Sales, SGA, and R&D is related to growth.
My point is most companies, they make money selling goods or services at a certain margin then growth by selling more.
Twitter has to grow by figuring out how to make more money with the "assets"(users) it has. Yes they will grow their user base but it won't be anywhere in relation to what they need to grow their revenue and profits in relation to justify their 25 billion dollar market cap.
There users are already valued at higher than linkedin or facebook. So the market things there is more value there. I disagree.
I don't feel like what im saying, that tech ipo's are historically overvalued, is really out in left field.
This post was edited on 11/8/13 at 11:00 am
2
Posted on 11/8/13 at 5:38 pm to barry
Nice 7.24% drop in price today. 
Overnight millionaires dumping that crap.
Overnight millionaires dumping that crap.
Posted on 11/9/13 at 12:10 am to barry
quote:Yeah, it helps to look at gross margins when valuing high growth tech companies, because profit margins can be misleading. When the cost of the "goods" is low, you can get a good idea for what the eventual profits might be.
They have 60% gross margins
quote:
Don't tell me that 100% of the cost of Sales, SGA, and R&D is related to growth
No, probably half of it is though, which would put Twitter's profits in the neighborhood of FB and GOOG's once the growth starts to slow down to their levels. The biggest question is what will Twitter's growth curve look like.
quote:It's not out in left field, it is true, but the key word is "historically". The tech industry (and tech investors) have matured quite a bit over the last decade. The revenues are real, and the growth is real. But being "profitable" as such a young company isn't as big a concern as the "value investors" think it is. These companies don't have to figure out how to become profitable, they just have to decide when to become profitable.
I don't feel like what im saying, that tech ipo's are historically overvalued, is really out in left field.
That said, I have to agree that Twitter is probably overvalued by quite a bit at this point. I will have to watch it for another year or so to see if they maintain their revenue growth.
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