This Is Another Sign Twitter Went Public Too Early

Twitter is still finding itself

Jun 12, 2014 at 10:57PM

U.S. stocks finished lower on Thursday, for a third-straight day of losses, as the benchmark S&P 500, and the narrower Dow Jones Industrial Average, (DJINDICES:^DJI) both declined 0.7%. The technology-heavy Nasdaq Composite Index (NASDAQINDEX:^IXIC) lost just 0.8%.

From short-term performance to long-term forecasts (the only ones worth paying any attention to): This afternoon, asset manager GMO released its seven-year asset class return forecasts as of the end of last month. The numbers make for grim reading.

GMO's forecasts -- which have had a good predictive track record -- have large-capitalization U.S. stocks returning an annualized loss of 1.5% after inflation, while small-cap U.S. stocks are expected to do substantially worse, with an annualized loss of 4.5%. The final U.S. stock category for which GMO publishes a projection, "High Quality" is at least supposed to produce an annualized gain, albeit a rather slim one, at +2.3%. The conclusion: Stay committed to a very long investing time horizon (i.e. longer than seven years), and keep saving regularly. Alternatively, if you have the expertise, time, and inclination to pick stocks -- and most individual investors don't -- plying that craft could make a significant difference to your returns.

Twitter: Still finding itself


Source: Twitter

In a statement filed with the SEC today, Twitter (NYSE:TWTR) announced the resignation -- effective immediately -- of chief operating officer Ali Rowghani, the third high-profile executive to leave the micro-blogging company this year. Twitter chief engineer Chris Fry left at the end of May, and Michael Sippey, vice-president of consumer product, left in January.

Mr. Rowghani was tasked with a key objective: Widening Twitter's appeal in order to reach a mainstream audience and become a genuine competitor for Facebook (NASDAQ:FB), which, incidentally just scored a high-profile hire this week, luring Paypal president David Marcus away from eBay in order to head up Facebook's mobile messaging unit. Twitter has 255 million monthly active users, only a fifth of Facebook's total.

Following a huge post-IPO run-up in its share price, Twitter's first two sets of quarterly results have raised serious doubts about its ability to achieve that goal, with the user count growing just 6% sequentially last quarter. Rightly so, in my opinion -- I simply don't believe Twitter's format and structure is consistent with broad appeal.

People know why they join Facebook -- to connect with their friends and family. However, outside certain professions -- journalism, for example -- Twitter is having a hard time convincing people that it's a must have; in fact, it's struggling just to provide a clear pitch of what the service is, to begin with. Twitter shares are down 42% year to date.

Mr. Rowghani had been pushing for Twitter to acquire online music sharing site SoundCloud or consider buying another streaming music platform, which seems a bit harebrained, and doesn't address the company's aforementioned core challenge, which is that it doesn't know what it is or what it wants to be. Twitter will not replace Mr. Rowghani; instead, CEO Dick Costolo will now be responsible for the development/redesign of the site; at least no one will be able to say that the issue isn't getting attention from top management. Still, I think this is evidence that Twitter went public too early. Furthermore, with the stock still trading at nearly 14 times sales, there is reason to believe the correction could have further to run.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Alex Dumortier, CFA has no position in any stocks mentioned. The Motley Fool recommends Facebook and Twitter. The Motley Fool owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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