Do you think Twitter is worth $24,460,000,000? I’ll make it easy for you. Twitter is worth $24 billion and change. The market says so. Multiply outstanding shares by price and voila.
Twitter’s new stock issue opened at $24 and closed at $44.90. Twitter makes no profit. Its loss per share is $1.11.
Why is it being bid up?
Where have we seen this before?
The chart at the top of this entry shows the tech heavy NASDAQ index since 1974. That big spike around 2000 is the “Tech Bubble.” If you bought at that peak, you still haven’t made your money back!
Compared to Facebook, my response on Twitter is tiny. Maybe it’s not that way for everyone, but I can’t be alone.
I suspect most people don’t quite ‘get’ Twitter and how to set up an account that serves them. Today I heard 30% of those who go on Twitter abandon their account. Twitter is too hard to understand.
The problem with all this money going to Twitter is, it’s not going elsewhere! I worked in TV where we competed against the Internet. We had bills to pay every month. The Internet media saw a profit somewhere in the future. It’s tough to compete against that business plan.
Owning a TV station today is not what it once was. Eyeballs are tougher to come by. The pie is sliced into smaller pieces. Viewers are shortchanged as less is spent serving them. And, like Twitter, the competition often isn’t required to turn a profit.
I’m scared we’ll see this bubble burst as it’s burst before. Bubbles hurt the economy. Selfishly, bubbles hurt me personally. My 401-K is heavily in the market and subject to these gyrations.
This whole Twitter run-up today seems irrational. That’s because it is.