How do I know this? Because I keep reading the tweets of people who follow me @JimCramer. They keep hawking Twitter because of a new advertiser or because of the video homes of Periscope, or because people watch sports and tweet.
Or we hear takeover chatter with a number of acquirers mentioned. People who read our bulletins for ActionAlertsPLUS.com know that I think Twitter's stock is worth owning. There are things that can go right. The problem we see, short term, is valuation both on earnings and on takeout. Let's take the latter first.
All the natural acquirers are very sensitive to how their stocks will fare if they make a big acquisition. They fear taking on Twitter's losses and its slowing growth. They are worried, frankly, if Twitter is a business or if it is a fad.
Let's take the case of Facebook (FB) potentially buying Twitter. Many people think Facebook is overvalued. They wonder why Facebook doesn't use its own expensive currency to buy Twitter, which is currently valued at $24 billion -- particularly when they spent $21.8 billion buying WhatsApp last year in a mostly stock and some cash deal.
After all, WhatsApp, which had 450 million users when Facebook ceded a tenth of its market cap to buy it, was losing $138 million that year. Lose one, lose all!
But since that time WhatsApp has doubled its number of users and it fits perfectly into Facebook's plan to have billions of people wired into its world in a very short period of time. If you wanted pure growth, which Facebook does, WhatsApp has already turned out to be a terrific bet.
CEO Mark Zuckerberg made it clear on the last Facebook conference call that he didn't buy WhatsApp to lose money. Who am I to disagree with an acquisition that has about the fastest new user growth on earth?
Twitter, on the other hand, has relatively slow user growth. The company has, as of the last quarter, 302 million monthly-added users. But it added only 14 million users in those three months. That is better than the four million people it added in the previous quarter but a snail's pace vs. WhatsApp.
That wouldn't matter as much if Twitter were making money, but it's losing gobs of money. Facebook will accept losses with hyper growth, like WhatsApp, but it will not tolerate slowing growth and big losses like Twitter has.
The only reason I keep talking about Yahoo! (YHOO) as a potential Twitter buyer is if you back out Yahoo's stake in Alibaba (BABA) and Yahoo! Japan you get a company that's worth nothing and if that's the case why not gobble up Twitter? What do you have to lose if your company's being valued at nothing?
So why own Twitter at all? Because you have to believe that it can either figure out how to bring on board more people and re-accelerate growth, or that it can develop ads and start making money. Then, every one of these companies would be an acquirer or the stock would go higher on its own.
The only other way a deal occurs is for the stock to have a huge drop to where it can be bought for far less than it is selling now. Twitter is in no man's land right now -- too expensive to be acquired without growth or profitability but cheap if it can figure things out.
As long as you know those parameters it's okay to own, which is how we feel about it for the charitable trust. If you don't understand the risks, though, you will end up being frustrated and, I fear, end up selling it after what I expect could be still one more bad quarter ahead.
Editor's Note: This article was originally published at 1:30 p.m. EDT on Real Money Pro on May 19.