This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
TheStreet Open House

Twitter: Covestor's Randall and Sizemore see a pricey stock

Stocks in this article: FBGOOGTWTR

By Covestor Investment Management

The share price of Twitter (TWTR) took flight this week after the micro-blogging service surprised Wall Street by reporting that revenue more than doubled to $312.2 million in the second quarter on a 24% jump in user growth. At the same time, the company posted a $144.6 million loss during the quarter.

E-Commerce Times interviewed Covestor Crabtree Technology portfolio manager Barry Randall about the company's strategy and outlook.

Down below are expanded remarks from Randall and Charles Sizemore, founder and Chief Investment Officer of Sizemore Capital Management LLC. Sizemore manages four portfolios on the Covestor platform.

Here's how Randall sizes up Twitter:

Why is growth so important to Twitter? Growth is important to Twitter’s investors because it puts off the need to be profitable and supports the company’s stratospheric valuation. Growth is important to Twitter, itself, because it’s engaged in a battle for mindshare with other social networks like Facebook (FB) and with traditional media sources.

And Twitter’s second quarter provided naysayers with a lot of growth in revenue, monthly average users, timeline views and several other metrics. I was particularly impressed by the 100% annual growth in revenue per timeline view – a strong measure of advertiser satisfaction.

But Twitter’s belief that its user base is under-counted is a universal claim of every media company on earth. For example, magazine publishers have moaned for years that a single copy might be read by hundreds of people in a doctor’s office.

That may be true, but if Twitter wants to join the downtrodden brotherhood of traditional media companies, it should be prepared to be valued like one, not a dot-com bottle rocket.

Why is Twitter so often compared to Facebook? Twitter is often viewed through the prism of Facebook: both are huge, fast-growing social networks. Both are also huge natural monopolies: nobody wants to have to tweet on Twitter along with a bunch of clones.

When ranked by monthly average users, Facebook remains four to five times as large and is already quite profitable. But Twitter, with four straight quarters of accelerating revenue growth, is worthy of the comparison. And with Twitter already getting 80% of its revenue from mobile, it’s already ahead of Facebook.

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 16,461.32 -153.49 -0.92%
S&P 500 1,927.11 -14.17 -0.73%
NASDAQ 4,382.8470 -36.6310 -0.83%

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