Twitter Likely to See $30s Before $50s

NEW YORK (TheStreet) -- I'm a huge Twitter (TWTR) fan. I've been using it since March 2007. It's uniquely positioned and has many possible revenue streams in front of it.

Operationally, I'm sure the company is going to have a bang-up year next year.

But in terms of the stock, I think Twitter's much likelier to see a stock price with a 3 in front of it rather than a 5.

Thursday's initial public offering was tremendous. After initially discussing pricing in the teens a few weeks ago, with every tech blog on the planet complaining about low user numbers and decelerating revenue growth, the stock prices at $26 and opens at $45.


Good for the company. I'm happy for them, the New York Stock Exchange, and Goldman Sachs (GS) including Anthony Noto. They completed a near-perfect IPO. They showed Facebook (FB) how it should be done by following the LinkedIn (LNKD) playbook almost to a "T."

But there's no way that Twitter deserves a $35 billion valuation right now.

Even at $25 billion -- which would be around $36/share -- that's a stretch.

Yesterday, the exuberance took the stock right up to kiss $50. Then it immediately dropped back, closing below its open price. Today, it's slumping again.

As with Facebook, I think the underwriters are going to do their best for the next week or two to keep this thing levitating. But you can only hold your finger in the dike so long.

My guess is that this stock is heading shortly to the $30s, possibly low $30s.

There will probably be some new ComScore or Forrester report one of these days that says a sample of 20 13-year-old girls don't think Twitter is as cool as it was last December. The stock will drop 7% the next day and see carryover momentum.

It's not fair, but then again it's not fair those who bought the deal at $26 on Wednesday night got to flip it for a quick double yesterday. That's just the way the world rotates.

I hope Twitter sees the low $30s again and maybe we get a blah quarter out of them where there are again questions about revenue deceleration that forces more of a crisis in confidence in the stock. I think it will be a great buy at those levels.

A year from now, I see Twitter trading up to $60. It's too strong a platform, too strong a company.

But right now, these levels are too far, too fast.

At the time of publication the author was long FB.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Eric Jackson is founder and Managing Member of Ironfire Capital and the general partner and investment manager of Ironfire Capital US Fund LP and Ironfire Capital International Fund, Ltd. In January 2007, Jackson started the world's first Internet-based campaign to increase shareholder value at Yahoo!, leading to a change in CEOs in 2007. He also spoke out in favor of Yahoo!'s accepting Microsoft's buyout offer in 2008. Global Proxy Watch named Jackson as one of its 10 "Stars" who positively influenced international corporate governance and shareowner value in 2007.

Prior to founding Ironfire Capital, Jackson was President and CEO of Jackson Leadership Systems, Inc., a leadership, strategy, and governance consulting firm. He completed his Ph.D. in the Management Department at the Columbia University Graduate School of Business in New York, with a specialization in Strategic Management and Corporate Governance, and holds a B.A. from McGill University.

He was previously Vice President of Strategy and Business Development at VoiceGenie Technologies, a software firm now owned by Alcatel-Lucent. In 2004, Jackson founded the Young Patrons' Circle at the Royal Ontario Museum in Toronto, which is now the second-largest social and philanthropic group of its kind in North America, raising $500,000 annually for the museum. You can follow Jackson on Twitter at or @ericjackson.

You can contact Eric by emailing him at