Here is the article, where it's mentioned that TWTR has much higher efficiency than FaceBook an Linkedin according to the EV/MAU (monthly active users) ratio. In the same time it has constantly improving revenue growth and EBITA. I would like to hear your opinions on Twitter: sell or buy?

– While user growth has been stagnant, resulting in the decline of the stock, the company continues to grow revenue at 35% YoY, and EBITDA at 73% (Source: Q1 results). The company also generated net cash from operations of about $400m in 2015.

– The stock currently has an Enterprise Value of $9.5bn, and with a 2017 forecasted EV/Sales ratio of less than 3 times, it appears attractive from a value perspective.

I got this far before I started actually laughing. This article is terrible and written by someone who wouldn't know a 'value play' if it walked up and punched him in the nose. A 'growth stock' (calling it this is the same as calling it grossly overvalued usually) that doesn't turn a profit and has stalled its user base?

I'm not saying Twitter is worth 0, but it's worth a ****load less than 11B. I'd short it if people weren't crazy but if people weren't crazy it wouldn't have this 'valuation'.

Twitter could double or triple. It looks terrible now but things change. A new CEO or similar will drive a new bullish cycle.

No idea from a value perspective. It's really hard to value something like this. LNKD sold for $26 billion. If it limps along for another few years, who knows what its network and databases would be worth to various players.

Twitter management WOAT.

It's a growth play if they wipe out the exec team and start over.

How would you change Twitter, mmbt? It has none of the network effects of something like FB, which has real names/accounts/all your friends on there. How do you grow and monetize a public soundbite communication platform?

IMO TWTR is trash until it finds a way to make money...

It got a bump bc of LNKD and take over stuff.

If it gets bought you'd probably make some good money. But when?

If it doesn't, I don't think it goes anywhere until it effectively monetizes.

2 quick easy answers:

Give major brands and celebrities the tools they need to manage online presence rather than them going to HootSuite or Nuvi or Buffer or all of the other options out there that can cost hundreds-thousands of dollars per month. If I'm a brand, I should be able to have people living in twitter doing customer support, monitoring sentiment, analyzing trends, etc. Almost none of this is possible at the moment within Twitter, but other companies have built the tools on top of Twitter in their absence (and with less good data).

Monetize video and share revenue back with creators to incentivize them to use your platform (YouTube)

Twitter has been trying to monetize traffic for ages and the consensus in Silicon Valley is they've forgotten without users, you got no product to monetize.

Within 20 minutes of my post Facebook announces they're dropping $50M to sign contracts with 140 video creators.

Zuck GOAT

https://twitter.com/CNBCnow/status/745320254709075969

The 140 can't be a coincidence, considering that Twitter announced today that they're having native video posts up to 140 seconds. Kind of amusing.

Full disclosure: I bought in a few weeks ago at 14 and change.

The company has 3.5b in cash and ~600M in ad revenue (and tons of FCF) in the past quarter when seasonality has the most impact. If all they did was turn off the R&D, which you could argue they don't need, the company would be really profitable. There's also a non zero chance periscope or vine turn into a valuable property and they have other assets that are valuable to developers.

I may be delusional but I'm not sure how a compan running at 2.4B in revenue with 3.5B in cash is worth only 11B.

There's also a non zero chance of an acquisition and there's some improvement they can make to their ad engine on the seller side. To me, there's core value Twitter because all content eventually gets distributed via several major platforms (see Wu's the master switch) and twtr is one of those platforms.

Fb was in a similar position when it was in the crapper - hadn't realized the effects of feed ads + they were in the midst of building out tools to make ads more effective. Fb also had a huge advantage that the core services were growing a lot more quickly than Twitter(even though the press was young people are abandoning FB in droves). Core difference is FB grows the user base to over 1b, turns ads on, then builds out tools.

There's no way to turn off the R&D. That's just a fiction, although one that many people fall for when looking at losing companies ("they'd be great if you could take the R&D off the balance sheet!")

In most cases you can't and R&D is an integral part of simply surviving. It's not speculative research like drug companies or Google is doing. It's stuff that keeps their core business running.

Let me put it another way: if this is genuine "R&D", what has $800 million in "R&D" last year bought in terms of innovation? mmbt lists above basic stuff that company should have; what precisely are they doing with this $800 million? What about the $1.5 billion in the past two years?

When you get the R&D nonsense out of the way: they're a company that's ceased growing, with poor management, that's losing half a billion dollars a year with no profit in sight.

I agree with this post which is why I think Twitter is such a terrible stock right now. The reality is that if everything goes perfectly they double MAYBE triple. If things don't go right they might be worth 1B... Or 1/11 of what they are worth today. The R:R is just awful. Such a -EV bet it's not even funny. Might be worse than lotto tickets.

They brought in > 600M last quarter with the core base of users. It's not like they're suffering from massive secular decline.

That's 7 years of burn currently. Companies that have a burn rate instead of a profit margin don't get to ask me to value them on revenue unless they are growing rapidly in every conceivable way and a clear way to monetize that growth. Twitter has neither.

From my point of view the company isn't worth 3.5B as it stands today. I'll give them a pass on losing 500MM a year... But I'm not going to give them a red cent for their money losing business without clear growth in both users and revenue/user. As TS said tech companies R&D basically is their COGS and isn't something you can just turn off.

They won't do it, but you don't need that R&D budget to keep Twitter going. The core code base is fine as are the deploy pipelines. All they really need is an ops team and a core group of engineers to keep the platform up.

Instead, they're busy refining the news feed, building fancy devops tools, and adding poor products like moments.

They are valued at a PE of -15. Being valued at 3.14x of their cash on hand is insanely far beyond fair. Not growing users when you have a PE of -15 is a secular decline because SO MUCH growth is baked into that kind of valuation.

Also, Twitter needs to stop diluting their shareholders by constantly throwing stock at employees so they stick around.

http://www.marketwatch.com/story/twi...oos-2016-04-27

Do you actually know what the R&D spending goes on, or are you assuming? It's easy (and many tech companies do) put basic operating expenses into R&D, because the leeway in accounting rules allows them to. After all, if video posting volume is increasing and you need to write tons more code/build out vast new server spaces just so the videos keep playing, you're certainly doing research and development, but is that really R&D? Sure you could cut out video (lol?) and save this expense, but no company is going to do that without destroying their business.

Well, you're assuming R&D costs are all actually going toward this and not core expenses, which I don't think you know as it doesn't seem broken down.

And secondly, don't they need to do this? They're competing with Google, FB, etc for ad dollars, who are constantly innovating and providing new ways of reaching customers. If Twitter stops, do you think their revenue will stay stable?

I'm going to be really interested to see how much of that R&D expense is justified for a lot of these B class (in terms of profitability) tech startups that start being forced to.

I can guarantee from a digital product development and maintenance perspective these companies aren't being run anywhere near their justifiable costs if you were focusing on profitability. There's plenty of sacred cows that probably won't be cut in the foreseeable future but in an ideal world taking the R&D budget down by 50%+ isn't crazy.

I realize this won't happen but I believe it's theoretically possible at some point if you were to make large structural changes.

Regarding the future, Twitter themselves are pretty clear: We plan to continue to hire employees for our engineering, product management and design teams to support our research and development efforts. We expect that research and development costs will increase in absolute dollar amounts for the foreseeable future and vary in the near term from period to period as a percentage of revenue.

A lot of this research and development is actually stock based compensation (the cost of getting and keeping talent), and activities which do nothing but support the core product, if you look at their 10K. It also includes write-downs of their acquisitions.

Be interested if there's more in-depth analysis out there, perhaps from an analyst.

Like I said, I don't think they'd actually stop r&d since they have a strong product CEO and he thinks they can continue to grow, it's just a thought exercise and a proxy for value.

They don't operate their own data centers and, last I looked, data center costs were accounted for under cost of revenue. Also, unless you're Netflix, bandwidth and commodity servers are really cheap nowadays.

The place where it would make sense to spend on R&D is any technology which increases engagement, feed quality, or value of network to advertisers. Everything else(the majority of their R&D spend is pointless, IMO. I work at a major cloud company and would print money if we canned everyone in R&D. We do need those folks to scale for larger customers and create future growth opportunities, however.

I appreciate folks vetting my thinking here.

This is the same at every public tech company. The only way to compete for talent without burning cash is RSU based comp - and large amounts (like 200k grants per year for senior engineering talent). Although look for this to decrease over time as stock prices come down and Wall Street pushes back.

Whatsapp has something like 20 engineers when acquired. Twitter isn't nearly as efficient from a tech perspective but you could probably run it with 50-100 engineers, the core platform hasn't really changed and anything they've done to it in the last few years hasn't added much value.

They're literally wasting money building periscope in house, the app gets no traction, so then they buy periscope for an iOS app and pay a ton for it.