3 ms·

> $1.5b profit/year If they actually got to $1.5b annual earnings, they could definitely justify a $12b cap. A P/E of 8 would be ridiculously low for the techn

> $1.5b profit/year If they actually got to $1.5b annual earnings, they could definitely justify a $12b cap. A P/E of 8 would be ridiculously low for the technology industry—heck, for any industry. I'm not enthusiastic about Twitter and certainly wouldn't buy the stock, but the company also definitely isn't "worthless." There's certainly a path to profitability.

mason55 11y ago
> A P/E of 8 would be ridiculously low for the technology industry—heck, for any industry. In this scenario they have fired everyone and given up trying to grow. A P/E of 8 would be way overvalued.
- khuey 11y ago
  You would only have to pay out 360 million a year to shareholders on a market cap of 12B to get a 3% dividend yield. It may not be sexy, especially in Silicon Valley, but Twitter could be a perfectly viable company.
  - sgt101 11y ago
    But that's the problem they have - the market is/was bought in on the basis that this is a $40bn company (or more), the price reflects an massive upside belief, but the reality is $12b is about right. So - sack a lot of people, cut costs, hold cash in the business and disappoint investors... Will the investors wear that though?
- morgante 11y ago
  > A P/E of 8 would be way overvalued. I disagree. For one thing, a P/E of 8 is standard for industries which most think are either declining or entirely stable. Benjamin Graham used 8.5 as a "no-growth" P/E so it's hardly insane. [1]https://en.wikipedia.org/wiki/Benjamin_Graham_formula https://en.wikipedia.org/wiki/Benjamin_Graham_formula Moreover, even without feature expansion, I do think Twitter will see growth, though that growth will be minimal. At the very least they stand to benefit from the ever-increasing number of people on the internet.
- kevinpet 11y ago
  A P/E of 8, in today's interest rate environment, means the company is actually failing and you're buying a decreasing future stream of revenue. Out of the S&P 500, there are four companies with P/E below 8 (Delta, Noble Corp (oil rigs), Yahoo, and Valero (oil again)).

mason55 11y ago

> A P/E of 8 would be ridiculously low for the technology industry—heck, for any industry. In this scenario they have fired everyone and given up trying to grow. A P/E of 8 would be way overvalued.

khuey 11y ago
You would only have to pay out 360 million a year to shareholders on a market cap of 12B to get a 3% dividend yield. It may not be sexy, especially in Silicon Valley, but Twitter could be a perfectly viable company.
- sgt101 11y ago
  But that's the problem they have - the market is/was bought in on the basis that this is a $40bn company (or more), the price reflects an massive upside belief, but the reality is $12b is about right. So - sack a lot of people, cut costs, hold cash in the business and disappoint investors... Will the investors wear that though?
morgante 11y ago
> A P/E of 8 would be way overvalued. I disagree. For one thing, a P/E of 8 is standard for industries which most think are either declining or entirely stable. Benjamin Graham used 8.5 as a "no-growth" P/E so it's hardly insane. [1]https://en.wikipedia.org/wiki/Benjamin_Graham_formula https://en.wikipedia.org/wiki/Benjamin_Graham_formula Moreover, even without feature expansion, I do think Twitter will see growth, though that growth will be minimal. At the very least they stand to benefit from the ever-increasing number of people on the internet.
kevinpet 11y ago
A P/E of 8, in today's interest rate environment, means the company is actually failing and you're buying a decreasing future stream of revenue. Out of the S&P 500, there are four companies with P/E below 8 (Delta, Noble Corp (oil rigs), Yahoo, and Valero (oil again)).