The Irrational Twitter Run-Up

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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!

twitter logoI use Twitter every day. Twitter and Facebook are how I promote my blog entries and get the word out on projects I’m involved in. I’ve sent over 14,000 tweets.

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.

3 thoughts on “The Irrational Twitter Run-Up”

  1. Personally I don’t think Facebook or Twitter is worth 5 cents. When I worked for an ISP and saw similar things take place. The bottom dropped out of NASDAQ back in 1999. Twitter isn’t that difficult to set up an account any more then Facebook. I would compare it with a chat room like on Pogo. It is obvious that TV stations are up against the internet. One thing that I like about watching the news on TV, you see pictures and real people. If I want instant news or track down a previous story I’ve heard about, I check out Yahoo or Google. Both have good & bad points.

  2. My daughter and all of her friends are on twitter – because their parents aren’t and they find it easier to converse with than Facebook. More like texting perhaps.

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