No one really knows what $TWTR is worth. No wonder, the stock gaps on every quarterly release. This is how it went on 2/6/2015:


But this Bloomberg chart does not reveal the actual volatility that occurred in the first 10 minutes after the afternoon earning announcement. The stock dipped all the way down to the $37 handle, before the disappointment in the user growth gave precedence to the upside earnings surprise.

With no history to “smooth out” quarterly earnings volatility, the investors put a lot of weight on each release.

Twitter bears focus on the slow MAU growth, while the bulls are encouraged by the faster than anticipated monetization, widening advertising platform and the outreach to logged-out users.

I have no qualification to perform a “value” analysis on the stock based on any performance metrics. And my best guess: no one else does.

$TWTR is my philosophical play.

Yes, Twitter is not yet in the realm of numbers. It is in the realm of philosophy.

There are multiple skirmishes happening on the edges of social media domains, such as  instant messaging or video streaming. Twitter is losing some battles and winning some others.

Certainly, I prefer $TWTR to win every time, but when it suffers a setback, I am not too concerned. As long as it holds the heartland: the monopoly on being the real time conduit of power and influence.

Twitter is not for everyone, and Twitter is not Facebook. It is designed perfectly for distribution of information, opinions, jokes and fashions from celebrities and thought leaders to people who care about such things.

And that’s the key: Twitter will never get the engagement of Facebook, but it gets the kind of engagement that is shaping our civilization in real time.

I choose to believe that such incessant flow of power can be monetized.

$GOOG, $FB and $TWTR are similar in this way. Like the British Empire they have the privilege of holding their “island monopoly” and fighting wars on other nations’ territories.

Of those three companies, Twitter is most speculative and its future is most uncertain. I happen to think that the upside is large and I like the risk-reward profile, but it is not for everyone.

When the earnings will be released tomorrow afternoon, there likely to be volatility. I would read any numbers with a grain of salt. As I have said, it is too early for numbers. So if I wanted to trade the earnings, I would try to take advantage of the intraday volatility to implement positioning for my long-term views.

This is a principle I try to apply to all markets: “don’t panic after a news release, stick to your program”.

Image: “The Philosopher and the Bird” by Gideon van der Stelt

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Berkeley, CA 94704


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