People seem to either love or hate Facebook and Twitter, with emotions ranging high, like rooting for our favorite sports teams. Personally, I’m unlikely to win any football or basketball office pools because I’m so biased toward my favorite teams.
We can also suffer from some of these polarizing bias issues with individual stock selections—and especially social media stocks bearing the names of the most recognizable thumbnail icons of our time.
There will be winners and losers with Twitter, as with any stock, but I’m content to be an observer. This is for a couple specific reasons:
1) I am biased. Unlike Facebook, which I dumped as a personal social media outlet (for seven reasons that were important to me), I really like Twitter. I hope Twitter continues to do well so that those of us who are fans will continue to benefit from its many uses well into the future. In other words, I’m biased. I’m vested, and that detracts from my ability to be the best investor.
2) Another reason that I’m tentative about this whole Twitter IPO business is that, well, the company has never made a profit. One of the reasons for its cult following is that you don’t get slapped in the face by endless ads hunting for the content you seek (unlike some other social media platforms). You don’t have to be a stock picker to know that Twitter will have to access “as-yet-untouched monetization levers,” according to Jeff Bercovici at Forbes, in order to reach the upper end of its anticipated price range. That means they’ll have to find new ways to sell us, and if you’re anything like me, you’re probably hoping to be an untouchable monetization lever.
This is not investment advice—it’s gambling advice, because at this stage of the game, it’s anyone’s guess whether or not Twitter is going to successfully remake its loyal followers into a money-printing machine, 140 characters at a time.
TWEETABLE: Consider keeping your social media activity on your computer, phone or tablet--and out of your portfolio. #TwitterIPO