Months ago, we called for Twitter to sell off in grand fashion. And sell off, it did.
For months, Twitter fools… uh, bulls were atwitter about shares of Twitter, thinking it would run to $100 on subscriber growth and advertising revenue. But a funny thing happened along the way. They were left burned, bamboozled and broke by the usual calamity of social media stocks.
For months, we warned against the overvalued nosebleed levels the stock was reaching. Instead, investors were okay spending 70x sales and 40x book for a company with an absurd $35 billion valuation.
Above $70 a share, we noted, “it’ll come down as audience growth slows drastically. Twitter’s 241 million users only grew by nine million from the previous quarter, disappointing many.” we noted.
As we pointed out a few times, Twitter would face the same initial fate as Facebook (FB), LinkedIn (LNKD), Groupon (GRPN) and RenRen (RENN)…
Now, though, as the weak hands are shaken free, shares of Twitter may be a buy. Fear of the upcoming 474.4 million-share unlock have already been priced in. And insiders – say reports – aren’t likely to cash in at IPO prices.
Perhaps we could see a repeat of the Facebook performance, post-unlock. In November 2012 even as 800 million Facebook shares were unlocked, the stock surged from about $20 to more than $32 just months later.
Keep an eye on Twitter here.
As the bulls run for dear life, this may just be the buying opportunity of a lifetime.
Please note that all buy recommendations from The Cheap Investor will appear in your monthly letters. The purpose of this Market News report is to address reader questions, or bring potential, eventual opportunities to light.