Twitter Psychology. How investors will screw themselves. $TWTR, $FB, $LNKD, $GOOG, $MSFT, $YHOO #SEO

OK so Twitter (NYSE:TWTR) will report today after the close. This will be the very last earning announcement before they go public. You can hear the feeding frenzy coming. Surely this IPO will fare better than that last when with Facebook (Nasdaq:FB) taking a huge dump for a whole year.

Here are a few ways that investors will screw themselves with exuberant enthusiasm.

  1. They will dismiss the lack of profitability and ignore that a stock is the present value of future earnings less the present value of near term losses.
  2. They will focus on the wide-screen big picture without clear proof of concept. When TV was in its golden period, Mad Men on Madison Ave knew how to manipulate viewers. Despite hordes of SEO experts no one is turning away business because he or she is so damn good.
  3. The earnings call will try to dampen investor expectations. The market is in a frenzied state as is. Investors in their excitement will ignore management.
  4. Management may lay out what needs to be done by way of capital expenditure to finish building this marvellous money machine. investors will probably ignore this also.
  5. Twitter will not explain how they co-operate with the US Intelligence community. Other countries may sanction Twitter in the future. Significant geo-political risk exists.
  6. Twitter will stick to basics when discussing revenue growth. We all know they will acquire other companies but they will refuse to discuss it now. Twitter will need booster shots of rapidly growing earnings.
  7. Facebook can stop its financial levitation act. Now that it’s north of $50 you can sell it to pay for Twitter. How much higher can Facebook go any way.

George Gutowski writes from a caveat emptor perspective. Follow him on Twitter @financialskepti

Twitter More Valuable than Stupid Facebook Read Smart Reasons Why $TWTR $FB $LNKD

Business Insider or BI as some know it by published an interesting piece on Twitter. Now with the recent run up of Facebook (Nasdaq:FB) and the probable IPO for Twitter (TWTR) there is lots of speculation and comparisons of the two.

Personally I find Twitter easier to use and more useful for stocks and investments. But don’t let me influence you or your choice to buy into a hot IPO which may or may not increase your wealth. But the BI article covers 106 Finance People to follow on Twitter. I don’t think there is a corresponding article for Facebook.

Here is the link to the article. Enjoy.

George Gutowski writes from a caveat emptor perspective. Follow him on Twitter @financialskepti

Alibaba Short Term Loans=Long Term Problems. IPO Hysteria Pending $ALIBA

Alibaba who wishes to become a publicly traded company has convinced about nine big banks to lend it $8 Billion in supposedly US Currency. Normally companies prepping for an IPO do not find it helpful to become mega-borrowers. This logic is not in play for Alibaba. The tranches are all very short-term or revolving

Some of the funds are to repay existing payables and indebtedness. The press releases also speak of anticipating an IPO where the banks would be repaid from proceeds raised. This may be sound thinking on the part of the banks but if I was an investor I would not be motivated knowing that my precious capital will repay bank loans. I would be impressed if capital would go directly into some asset of wealth generation. Basics such as R&D, product expansion, accretive acquisitions come to mind.

The pump has already begun. Investors are expected to be impressed that so many large sophisticated banks are backing this horse. The whole “China is enormous” thing will be mentioned several times.

Just remember an $8 Billion dollar short-term loan is incredibly motivating in many ways.

Alibaba coming to your broker soon.

George Gutowski writes from a caveat emptor perspective.

Solarcity Not Energy Not Solar Long Bonds Stink Baby $SCTY

Image representing SolarCity as depicted in Cr...

Image via CrunchBase

SolarCity (Nasdaq:SCTY) is finally out. The IPO is done. They dropped the price, got the IPO investors frenzied and watched the after market price jump almost 50%. Well at least for one day.

Management had an apologia prepared about the higher sales price. They claimed institutional investors have bad memories of solar power and they stayed away from the party. Maybe.

They should have marketed themselves as an energy company. Stupid institutional investor for not getting that. They really are an energy company. Yeah well maybe. But they cut the price anyway and stayed with the old narrative.

Energy company. There are lots of energy companies. Most of them price off a carbon energy model.

What SolarCity does is install roof top solar panels, cut your electricity bill and take a middleman fee. Arbitrage. Broker. Flipper? They create a long-term twenty year cash flow.

Twenty years why that’s like a bond isn’t it. Yes grasshopper that is a bond. An unrated naked risk bond. Worse it is a long bond. Currently long bonds are the most dangerous high risk sector of the financial markets.

So why would you want to buy the equity version of an unrated long bond. Sucker deal.

No names of underwriters have been mentioned in s a few relevant media stories. They must be hiding like under a rock or something.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti

Zipcar IPO Ripoff Did Underwriters Cheat New Investors or Old Investors $ZIP #Zipcar

Image representing Zipcar as depicted in Crunc...

Image via CrunchBase

Zipcar Inc. (Nasdaq:ZIP) goes public and the share price nearly doubles starting with the first open trade. Who got screwed on this one? The valuation was clearly inaccurate as measured by the market.

What ever happened to underwriters trying to maximize the price at the offering? Existing shareholders are faced with unnecessary dilution. The market clearly would have paid more per share. The number of shares outstanding could have been less. EPS would have been way better on a going forward basis. Also you now have a horde of speculators trying to protect profits and waiting for the inevitable share buy back financial engineering as desperate CFO’s try to manage EPS growth.

The market is never wrong as they say except when it changes its mind. Underwriters rely on speculative fever to promote the stock. Investors are looking at increased share prices and believing they are richer than before. But no one is counting on the dilution issue. What we need is a good lawsuit from a pre-IPO investor who is not happy with dilution disguised in speculative fever.

Disclosure: “George Gutowski” writes from a “Caveat Emptor Perspective”. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.