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> 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 gro

• 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)).