Summary
- Pre-market drop makes perfect sense.
- The pace of user growth has declined at a much early stage than expected.
- Valuation is not justified based on this growth.
- Using a variety of scenarios, Twitter is at minimum 10% overvalued even including the pre-market decline of 11-12%.
Around 4-5 hours before the market opens, Twitter (NYSE:TWTR) shares are down around 11-12% due to earnings which were announced after the close yesterday. I looked into the numbers and compared it with Facebook (NASDAQ:FB) to see if a shorting opportunity still exists. I’ve come to the conclusion that TWTR will drop further and justifiably should trade at a discount to FB rather than at a premium.
To read the entire article go to: Twitter: Why You Can Still Short It
