Breakout

Twitter a ‘short,’ shares still overvalued: Jackson

Breakout

Twitter’s (TWTR) magnificent rise and precipitous fall to below IPO pricing has been a wild ride. Investors of the stock aren’t amused, but some are wondering whether a floor has been set for the stock at these levels. Eric Jackson of Ironfire Capital isn’t so sure.

Although Jackson believes the company isn’t “doomed,” in the attached video he says the Twitter story is going to get worse, and he’s putting his money where his mouth and is shorting the stock. “It has a lot lower to go before it bottoms out, and then people get overly negative, overly pessimistic and then Twitter can possibly surprise them on the upside. But I don't think we're there yet.”

What’s holding Twitter back from justifying its valuation, in Jackson’s mind, is users – or lack thereof. "It's a user growth issue,” he says, noting “Wall Street is now waking up to the fact that Twitter is not now, or ever going to be Facebook (FB).” Jackson says investors rewarding Twitter shares with a “generous valuation” was pure fallacy without the numbers to back it up.

For Jackson, over the last two Twitter earnings calls investors are finally coming to grips with the fact that Facebook-like explosive growth isn't going to happen. "It got way overvalued, and now we're seeing an adjustment. It's a great service, I'll continue to use it, but it's not worth 35 times revenue."

2014 has been a year full off tech IPOs, and it appears by recent price action that appetite for companies like King (makers of Candy Crush Saga) and Grubhub.com is waning without the growth numbers to back it up. With Alibaba’s IPO coming up in the near future, it will be interesting to see if Twitter’s rise and fall with will be the recipe for investor pain to come with future tech offerings.

More from Breakout:
The boys who cried wolf: Crash prophets on the rise
Skechers clipped on team bid; LinkedIn sinking on forecast; AstraZeneca rebuffs Pfizer
Jobless rate hits 5-½ year low, here’s why no one’s happy

Rates

View Comments (4)

Recommended for You

  • Gold crashes and is now tarnished for good

    Gold shined brightly at the beginning of 2014, with bullion prices jumping by about 13% from New Year’s Day until mid-March. Last week, the precious metal settled near lows not seen since Christmas 2013.

    MarketWatch50 mins ago
  • Want a Career Change in Education? Earn your M.Ed.

    A Master of Education degree can help you launch a new career as a school administrator, curriculum director and more. Why wait? Apply to GCU!

    AdChoicesGrand Canyon UniversitySponsored
  • Blackstone to pull out of Russia

    US private equity group Blackstone is "giving up on Russia", highlighting how even well-connected western investors are shying away from doing business in the country. The New York-based buyout group has been frustrated in its attempts to find deals in the country since its co-founder Stephen…

    Financial Times
  • Here's What Mark Cuban Wishes He Knew About Money In His 20s

    AP Mark Cuban is the owner of the Dallas Mavericks. Billionaire investor and entrepreneur Mark Cuban is generous with his advice. When we asked him what he wishes he'd known about money in his 20s, he said:

    Business Insider
  • 10 Stocks Trading Under $10 With Huge Upside Potential

    Ballard Power Systems Inc. (BLDP) has been around forever as a fuel cell play. DryShips Inc. (DRYS) was started as Buy with a $5 price target at Deutsche Bank in a late-Monday call. The Deutsche Bank research on the sector was very positive, with 2015 expected to be a solid year for growth across…

    24/7 Wall St.
  • Russian Stocks Drop Fourth Day as Alrosa to Sistema Retreat

    Russian stocks headed for the longest losing streak in two months as AFK Sistema continued a retreat triggered by last week’s arrest of its billionaire owner and OAO Alrosa dropped after the diamond producer’s chief executive officer stepped down. The benchmark Micex Index (INDEXCF) fell 0.5…

    Bloomberg
  • Tax refunds will be cut for ACA recipients

    A significant benefit of the Affordable Care Act is the opportunity to receive money-saving tax credits up front to cut the overall cost of health insurance, but now hundreds of thousands of consumers could owe back some of that money next April.Those affected took advance payments of the premium…

    USA TODAY
  • Play

    'Great Rotation' Into Stocks Runs Its Course

    Investors have been putting money back into bond funds as interest rates have unexpectedly dropped this year.

    Morningstar
  • What's Your Definition of Success?

    Success means different things for different people, that’s why we’ve started “The Success Project”.

    AdChoicesstrayerSponsored
  • Top 5 money problems Americans face

    Many Americans fear for their financial future.A recent survey by Money-Rates asked people about their financial worries, regrets, and fears. More than one-third (35%) of the Money-Rates survey respondents said that paying regular financial obligations — bills, a mortgage or rent payment, credit…

    USA TODAY
  • Ethiopian Air Places $2.1 Billion Order for Boeing 737s

    Ethiopian Airlines Enterprise, Africa ’s largest carrier by revenue, agreed to buy 20 redesigned 737 models valued at $2.1 billion in the largest single order for Boeing (BA) Co. planes by a carrier from the continent. The Boeing model will be a key component of the Addis Ababa-based carrier’s…

    Bloomberg
  • Oklahoma City oil producer unveils new formation

    An Oklahoma City-based energy company has unveiled a new formation in south-central Oklahoma that the company's CEO said will elevate the state as an oil producer. Continental Resources Inc. said western Oklahoma's Springer Shale deposit is in the heart of the South Central Oklahoma Oil Province,…

    Associated Press
  • At a Glance: the business dealings of Jeb Bush

    Jeb Bush entered the Florida governor's mansion in 1999 with a net worth of $2 million, a relatively modest fortune compared with others in the Bush family. Within months of leaving office, he started a consulting firm, registered as a broker for Lehman Brothers and joined a number of corporate…

    Associated Press
  • Weak Yen Seen Putting Japan at Recession Risk by Iwata

    Japan is in danger of falling into a recession as the yen’s decline reduces the purchasing power of households and squeezes corporate profits, said a former deputy governor of the Bank of Japan . “The current yen weakness is slightly excessive,” Kazumasa Iwata, the deputy from 2003-2008, said in an…

    Bloomberg
  • China IPO Easing, ITT Wells Notice, Espirito Santo: Compliance

    China will ease restrictions on initial public offerings by brokerages to aid them in their expansion plans as the government seeks to make domestic players more globally competitive. The China Securities Regulatory Commission will scrap requirements that only brokerages with “good growth…

    Bloomberg
  • Master's Degree in Nursing

    CCNE accredited MS in nursing in as few as 18 months online. Learn more today!

    AdChoicesNorwich UniversitySponsored
  • LVMH Dealmakers Pair Dumplings With Dom Perignon: Southeast Asia

    LVMH Moet Hennessy Louis Vuitton SA (MC) ’s private-equity arm, which bought a rooftop bar and dim sum restaurant chain in Singapore this year, is seeking more investments in the region to gain from rising consumer spending. L Capital Asia sees opportunities in Singapore’s food and beverage,…

    Bloomberg
  • Alibaba’s Banks Said to Boost IPO Size to Record $25 Billion

    Alibaba Group Holding Ltd. (BABA)'s initial public offering became the biggest ever at $25 billion, after bankers exercised an option to boost the deal size by 15 percent on strong demand, a person familiar with the matter said. The underwriters exercised a so-called greenshoe option to sell an…

    Bloomberg
  • Citizens Financial Stock Offering, and a New BlackBerry

    CITIZENS FINANCIAL GROUP TO HOLD I.P.O. IN NEW YORK Citizens Financial Group, a retail bank with 1,230 branches and $130 billion worth of assets, is scheduled to price its initial public offering this week. The firm is being spun off from the Royal

    The New York Times
  • Kashmir's famed carpets ruined in $5 bn flood losses

    Caked with mud and soaked in putrid water, Qazi Mohammad Yahya's ruined handmade carpets and Pashmina shawls reflect Indian Kashmir's economic devastation from the region's worst floods in a century. As the waters recede and the clean up finally begins, business owners, including those selling…

    AFP
  • How to Play the Real-Estate Market

    Skimpy interest rates, pent-up demand and lower prices have sparked gains of about 20% in the median price of new and existing homes over the past two years. Select REIT Index—which covers a number of investment vehicles—has climbed about 150% since the beginning of 2009, roughly matching the…

    The Wall Street Journal
  • Tencent: JP Morgan Cuts 2014 Mobile Game Forecast, Lowers TP

    J.P. Morgan cut its price target for Tencent Holdings (0700.HK/TCEHY) from 144 Hong Kong dollars to HK$137, on weaker mobile gaming revenue. Specifically, the bank now expects Tencent to deliver 10.3 billion yuan mobile gaming revenue this year, down 19% from the previous forecast of 12.7 billion…

    Barrons.com
  • Looking to Save Money on Home & Auto Insurance?

    Speaking with an insurance agent can help identify your eligibility for insurance discounts. Get a home & auto insurance quote today.

    AdChoicesFarmers InsuranceSponsored
  • Zambia’s Copperbelt Energy Restricts Power to Konkola on Dispute

    Konkola Copper Mines Plc said Zambia’s Copperbelt Energy Corp Plc is restricting its power supply amid a dispute regarding tariff increases. “The restriction in power supply will adversely affect Konkola Copper Mines’ operations and compromise safety of the employees and job security,” Shapi…

    Bloomberg