Twitter The Stock And Twitter The Service Are Worlds Apart
Twitter, which many have grown to have a love-hate relationship with, was founded nearly 14 years ago, on March 21, 2006. Twitter ranks as the 12th-most popular social media site, as measured by monthly active users, with approximately 335 million. For the 10% of users that send 80% of the tweets, as measured by U.S. accounts, Twitter has become an addiction of sorts.
Whether utilized for news, sports, following celebrities or just to browse funny GIFs, hundreds of millions of people find immense value in the site. For news, in particular, Twitter has essentially become the de facto go-to source for breaking news, whether it be politics, financial news or celebrity gossip.
However, from an investment standpoint, Twitter the stock is the polar opposite of Twitter the service. Twitter went public on November 7, 2013. Twitter shares jumped 73% on the first day of trading, opening at $26.00 and closing at $44.90, giving the company a valuation of around $31 billion. Investors rushed to buy the stock, sending shares of Twitter to an all-time high of $74.73 the following month.
More than six years later, that all-time high still stands despite the S&P 500 having gained about 75% over the same period. While still trading above its IPO price, shares of Twitter are now down nearly 60% from their high with a current valuation of just under $25 billion.
Yesterday, amidst the flaring tensions between the United States and Iran, U.S. President Donald Trump sent one tweet that illustrates just how important Twitter is. Trump tweeted "These Media Posts will serve as notification to the United States Congress that should Iran strike any U.S. person or target, the United States will quickly & fully strike back, & perhaps in a disproportionate manner. Such legal notice is not required, but is given nevertheless!"
The United States hasn't formally declared war since June 5, 1942, opting instead to use the term "authorization to use military force." On at least 125 occasions, the President has acted without prior express military authorization from Congress. Trump's tweet is very likely the first instance where the terms in which a war could start were spelled out on Twitter.
The tweet also serves as a reminder that a product, no matter how vital or popular, does not equate to a good business or investment. For instance, Alphabet, Microsoft, Salesforce.com, Verizon, and The Walt Disney Company all reportedly showed interest in acquiring Twitter before deciding against it.
"The troubles were greater than I wanted to take on, greater than I thought it was responsible for us to take on," Disney CEO Bob Iger recently said of the decision. "There were Disney brand issues, the whole impact of technology on society. The nastiness is extraordinary."
While Twitter seemingly becomes more important by the day, in terms of the news it generates, and as the go-to platform for some of the world's most important people to convey their message, it may also go down as the most prominent example of a great product being a poor investment.
It's probably nothing. The United States manufacturing sector recorded its worst month in December since June 2009, according to the Institute for Supply Management (ISM). The ISM's index of national factory activity fell to 47.2 in December from 48.1 in November. A reading below 50 indicates contraction in manufacturing activity, while a reading above 50 indicates expansion. December marks the fifth-consecutive month the ISM reading came in below 50. This is just the latest example of an economic indicator that is the worst since 2009.
Believe it when you see it. A Chinese delegation will travel to Washington on January 13 to sign the Phase One trade deal, according to the South China Morning Post. The delegation, led by Vice Premier Liu He, is reportedly planning to stay until January 16. Separately, U.S. President Donald Trump tweeted last week he will sign the deal on January 15. With neither side confirming He's visit, as well as saying in October the deal would be signed in November, there is every reason to be skeptical until a deal is actually signed.
Shares are almost $42 above $420. After rallying to the infamous "funding secured" level of $420 per share late last month, shares of Tesla hit a new all-time high of $454 before giving back some of the gains. Shares of Tesla gained after the company said it delivered 112,000 vehicles during the fourth quarter, exceeding Wall Street’s estimate of 106,000. The company also said it delivered 367,500 vehicles in 2019, the low end of its range, but a 50% increase from 2018. Given these delivery stats, Tesla's market capitalization is now approximately $217,00 per vehicle delivered, far outpacing every other major auto manufacturer.
Another issue for the 737 MAX. Boeing and the the U.S. Federal Aviation Administration are reviewing a newly discovered wiring issue on the troubled airplane that could potentially cause a short circuit. Boeing is analyzing whether two wiring bundles are too close together. A Boeing spokesperson said the company "identified this issue as part of that rigorous process, and we are working with the FAA to perform the appropriate analysis. It would be premature to speculate as to whether this analysis will lead to any design changes."
Buy a German car they said, they're great, they said. Mercedes-Benz owner Daimler will recall 745,000 vehicles in the United States due to issues with the sunroof that could cause the glass panel to detach. The recall, which begins on February 14, affects various models from 2001-2011. Mercedes owners who have already paid for the repair may be compensated, while those who have not will be able to get the repairs performed free of charge. Mercedes did not disclose the number of vehicles recalled globally or the estimated cost of repairs.