This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The 5 Dumbest Things on Wall Street This Week: Oct. 11

5. Twitter's Twits

Twitter. Tweeter. What's the difference?

Other than about $13 billion smackers that is.

In perhaps the single stupidest occurrence we here at the Dumbest Lab have witnessed in some time, overeager investors last Friday snapped up Tweeter Home Entertainment Group stock, which trades over the counter under the ticker "TWTRQ," mistaking it for shares of the still private Twitter, which is expected to start trading publicly in November under the symbol "TWTR." Shares of the bankrupt electronics retailer climbed as high as 15 cents Friday, up 1,400% from last Thursday's closing price of 1 cent.

Volume in Tweeter surged to 14.4 million shares from its regular daily average of about 29,000 as experienced traders rode the stock up on the backs of inexperienced retail investors who asininely believed they were purchasing a piece of the social media platform. Trading in Tweeter was eventually frozen with the stock at 5 cents around 1 p.m. Friday after the Financial Industry Regulatory Authority realized that too many rubes were stocking up on shares of a "possible initial public offering of an unrelated security." On Tuesday, Tweeter reopened for trading with the ticker changed to "THEGQ" and promptly fell back to a penny.

No fooling, FINRA! Did you really need more than three hours to halt that stock? It took 3 seconds for the rest of the world to figure out it was a case of mistaken identity.

Of course, this silly ticker mix-up is just the start of the insanity that will surely envelop Twitter as it legs its way to its IPO. Just as we enjoyed weeks of Wall Street wackiness prior to Facebook's (FB) fiasco of a coming-out party last year, rest assured that our friends at Twitter will reach similarly zany heights before they pound the gavel at the NYSE (NYX) or ring the bell at the Nasdaq (NDAQ).

And its already starting judging from the price targets being plucked out of the air by Wall Street's bullish analysts.

In the offering prospectus, which was unsealed last Thursday and the catalyst for all this madness, Twitter pegged the fair value of its common stock at $20.62 a share as of August. It's been widely reported that there are 620 million shares outstanding, which in turn gives the money-losing company a starting market value of just under $13 billion despite the fact that it has lost over $400 million since its inception in 2006.

Nevertheless, the company's IPO filing shows it generated $317 million in revenue in 2012 and had more than 218 million active users in the second quarter, up 44% from the prior year. That's enough of a growth story to spur the likes of Ironfire Capital, SunTrust and Gamco Investors to tell Bloomberg that Twitter could be worth $15 billion to $20 billion once it begins trading. Similarly, Jeffrey Sica, president of New Jersey-based Sica Wealth Management, foresees a valuation of as high as $40 billion when Twitter finally opens for trading.

Now we're not saying these folks will be proven wrong. By all rights, Twitter may explode from the outset and not look back, even though Facebook took a long trip down before finally eclipsing its offering price this past summer.

In other words, Facebook's crappy post IPO performance does not guarantee Twitter's future results.

That said, the already apparent idiocy over Twitter's upcoming offering certainly brings to mind the mishegas of Facebook's IPO. That's why we think Twitter founder Jack Dorsey may want to forget about a big splashy offering altogether and simply go public through a reverse merger using Tweeter as the shell company.

Heck, all his future investors are already trading that ticker anyway.
1 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
TLM $0.00 0.00%
EADSY $15.37 0.00%
BA $134.80 0.00%
MCO $95.72 0.00%
MSFT $49.87 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs