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Twitter Ties Profits to Global Mayhem

Stocks in this article: SCI

NEW YORK ( TheStreet) -- Just as investors in "death care" industry stocks like Service Corp International  (SCI) cross their fingers waiting for the next heat wave, investors who buy shares of Twitter after its IPO may find themselves in the awkward position of rooting for nuclear disasters, giant earthquakes and riots in the streets of cities around the world.

That Twitter breaks news and enhances its brand by doing so hardly a secret, but the company's S-1 regulatory filing Thursday ahead of its planned IPO made that link explicit in a way that caught a few people's attention.

"Ist time I've seen a company flag a dearth of natural disasters or political revolutions as a "risk factor," wrote Peter Eavis of The New York Times -- on Twitter, of course.

Indeed, the fact that Twitter's success is enhanced by events that often cause stock markets to tumble may give it appeal as what investors might term a "counter-cyclical" play.

There is also a way to put a positive spin on Twitter's role in revolutionary events. One could easily envision a member of Occupy Wall Street viewing an investment in Twitter as an investment in "The New Democracy." But it is easy to see how the line between supporting a tool that enhances Democracy and profiting off of political chaos can blur quickly.

The word "revolution" appears four times in Twitter's filing. Under a section titled "Our Value Proposition to Users," is a subsection called "Breaking News and Engaging in Live Events." It states: 

On Twitter, users tweet about live events instantly, whether it is celebrities tweeting to their fans, journalists breaking news or people providing eyewitness accounts of events as they unfold. Many individuals and organizations choose to break news first on Twitter because of the unique reach and speed of distribution on our platform. These events may be planned, like sporting events and television shows, or unplanned, like natural disasters and political revolutions."

In the "risk factors" section, Twitter notes "operating results may fluctuate from quarter to quarter, which makes them difficult to predict."

Those results, Twitter goes on to point out to prospective investors, "in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control."

Among those factors, Twitter states, is "the occurrence of planned significant events, such as the Super Bowl, or unplanned significant events, such as natural disasters and political revolutions."

Making money off of the misery of others is undoubtedly uncomfortable for many investors, but the link is indirect enough that it seems unlikely to drive anyone away from Twitter's IPO. Still, if the publicly listed Twitter sees a big share spike when the next big disaster happens, look for a big corporate donation to keep the company in good standing with the public.

-- Written by Dan Freed in New York.

Follow @dan_freed

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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