News Details – Smallcapnetwork
Before You Jump on the Twitter IPO Bandwagon... (Plus NFL Picks)
/

February 2, 2024

/

PDT

Happy Friday folks! I've said it before but I'll say it again ... even the worst Friday is better than the best Monday, right? And as it turns out, this particular Friday was a pretty good one. Stocks made their way higher, largely ignoring the now-four-days-old government shutdown. I still sense some hesitation from traders to really plow into the market in a huge way, but it's encouraging that investors aren't freaking out about the shutdown (at least not yet). In fact, several stocks almost seem to be thriving in this lackluster environment, and the SmallCap Network Elite Opportunity team got their hands on more than a few of them. See the chart immediately to your right? I can't tell you what it is, but I can tell you it's one of the recent picks suggested by the SCN EO. Granted, we've seen fakeout surges from this stock before, but there's something different about the current rally - it's unfurling on huge volume, which wasn't something we saw the last couple of times this stock popped. There's a very good possibility this move could be "the one" that really gets things going. There's just an awful lot of new buying interest that wasn't there before. Chalk up another one for the SmallCap Network Elite Opportunity. Now, if it had just been that one stock that was strangely bullish this week, I probably wouldn't even bother bringing it up. It wasn't just that one stock though. It seems like most of the SCN EO's recent picks have been doing exceedingly well lately even though the rest of the market's been in a slump. One of them is Atricure (ATRC), which was added to the SmallCap Network Elite Opportunity portfolio back in February. at $8.07. The position was already up about 10% at the end of August. In the meantime though, Atricure shares have gone parabolic and the position is up more than 40%. This stock (again, too soon to divulge it) has posted a massive gain in just the past four weeks too. The SCN EO team got into it on September 5th, right in front of an 11% gain that's still going strong. The point is, John Monroe's approach to picking stocks doesn't depend on the market's tide pushing things in that direction. These stocks seem to be ready, willing, and able to do their own thing - a bullish thing - regardless of what the market does. That kind of trading acumen is just priceless when things get squirrelly for the rest of the market (like they are now). Bottom line? The SmallCap Network Elite Opportunity is making great picks in all kinds of market environments. If the market's been tough for you to navigate of late, a subscription to the SCN EO newsletter can help you take advantage of the market's volatility rather than you getting taken advantage of by the market. Best of all, it costs you nothing to try it for a while. Here's how to get a free preview. Or, copy and paste the following link in your browser: http://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=SCN+Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1/ Now, let's get down to business. Twitter: Great Site, Lousy Investment Don't know how closely you've been following this story, but I'm willing to bet most of you are aware Twitter - the microblogging platform that's somehow garnered more than 200 million users - is going to issue in IPO soon. It's exciting. I don't know that it's as riveting as the Facebook (FB) and Groupon (GRPN) IPOs were, both of which debuted more than a year ago when social media was all the rage. But, Twitter is still growing, and generating revenue ... $317 million in 2012, and more than $254 million in revenue through the first half of 2013. Compared to the $1 billion it's seeking to garner through the initial public offering, that almost seems like a bargain. There's something you need to understand about Twitter before you dive in blindly, however. While almost every news source that's covered Twitter's IPO announcement has made it clear the company's looking to raise a billion dollars, I've found practically none that have adequately explained Twitter isn't a $1 billion company. Based on the structure of its current ownership, Twitter is actually valued somewhere between $10 billion and $15 billion (depending on certain stock awards). The organization is only issuing a small portion of itself into the open market's hands. In that light, things don't look quite as exciting as they do at first glance. While Twitter may well be on pace to do a billion in revenue this year and has been growing like a weed, if it's, conservatively say a $10 billion company, the price/sales metrics still don't look all that compelling. They're about three times the norm right now. I'd say Twitter even has a shot at turning a profit this year - its first ever - after posting an $80 million last year, and it still wouldn't be worth the price. Yeah, I know ... this is a growth story like Groupon and Facebook were, and you can't worry about the present value. I get that. I'll just say Twitter's been around for a while now (since 2006), and I'm not sure how much big-time growth there's left in store here. I'd guess like Facebook, Twitter's growth rate has already peaked and it's now expanding at a much slower pace. Either way, just know any stake in the company is going to be a lot smaller than it looks, because most of the company isn't going into the public float. My prediction? Oh, I'm sure we'll see the usual mania surrounding most IPOs these days. But, I've also got a feeling this one is going to end the way the last two big social media public offerings did. Here's Facebook's... .... and here's Groupon's. I'd be worried, because some of the same things the market and the media were saying about both of those stocks then are now being said about Twitter. Both of those stocks were crushed though, almost right out of the gate. Yes, they've both since come around; Facebook shares are even above their initial public price. But, just by exercising patience you could have gotten into both stocks a lot cheaper than the IPO investors did. I'm pretty sure we'll see the same play out with Twitter. With all of that being said, while Twitter's IPO may not be a homerun, we still love the site, and use it all the time to share our posts, comments, and newsletters. If you have a Twitter account and want to put us into your Tweet-feed, just go here - you know what to do. That's it for today. I'd talk about the market, but honestly, there's no point. Things get a little anemic heading into a weekend anyway, and doubly so when the government is shut down and we're all waiting on an end to the budget debate... and then some clarity on the debt ceiling. Just suffice it to say the indexes all remained between the rocks and the hard places they were trapped in yesterday. It'll all be waiting for us when we get back in the saddle Monday. Until then, have a great weekend. Oh, almost forgot.... this week's football picks (against the spread): Seahawks, Falcons and Chargers. Seattle's favored by three over Detroit, Atlanta's favored over the Jets by ten (the Monday night game, by the way), and San Diego should beat the Raiders by four and a half. If my tally is right, we're 1-and-5 this year with our picks (we forget the picks last week). This should be the week to turn things around though.