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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Repairing Your Portfolio From Twitter

NEW YORK (TheStreet) -- Twitter (TWTR) reported earnings Wednesday after the close, and for a normal company the report wasn't as repugnant as the subsequent free fall in share price may suggest.

Twitter isn't your typical stock even by the sometimes schizophrenic technology sector standards. I've covered why I believe this investment is full of peril in several articles including a week ago with Two Tech Stocks: One Hero and One Zero. Zynga (ZNGA) appreciated over 25% while Twitter lost about 25% of its market value.

While it's true that after you ignore a bunch of expenses the company posted a fourth-quarter fiscal 2013 profit of 2 cents, considerably better than the expected slight loss, and revenue increased an eye-popping 116% from the same period last year. Without removing those pesky "one-time" charges that seem to happen in one shape or another every quarter, Twitter lost $1.41 per share.

Losing $1.41 isn't the reason for the selloff, though. The problem shareholders face is the stock is priced like a Buzz Lightyear action figure -- to perfection and beyond -- while many key metrics are impressive, including a 600% gain in advertising and 80% increase in data licensing revenue. As you can tell, the company is growing quickly.

Many may ask, "What's the problem?" The problem is monthly active users didn't increase nearly as much as expected and, more important, a significantly larger gain was priced into the stock.

As we know with Amazon (AMZN), Tesla (TSLA) and SodaStream (SODA), bottom-line earnings isn't the most critical metric for a company with rapid growth. Tesla continues to race down the track, but Amazon and SodaStream recently gapped lower after growth expectations diminished. Twitter now joins the others, and Tesla more than likely will, also, before the year is over.

Ok, so Twitter isn't growing, or at least didn't expand as rapidly as hopeful investors bet on -- but now the shares can be bought for 25% less. Does this mean now is the time to buy? I don't believe so.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,979.13 +59.54 0.35%
S&P 500 1,986.51 +4.91 0.25%
NASDAQ 4,526.4820 -1.0320 -0.02%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs