Wednesday, October 29, 2014

Herb Greenberg on the Stock Market: Here's Why Twitter Should Sell Itself

NEW YORK (Real Money) – After watching Twitter's stock tumbled 10% during after-hours trading Monday night following the company's quarterly earnings report -- and listening to its earnings call -- it seems obvious: Twitter execs should just sell the thing. There is no shame in selling, even this soon after an IPO, for the simple reason that Twitter really should go through its growing pains outside of the pressure, distraction and scrutiny of being public. Must Read: 10 Stocks Carl Icahn Loves in 2014 As I've said here many times, throughout my criticism of the public Twitter, I'm a huge fan of Twitter the service. It has become my first read in the morning (quite a concession for someone who has been in the media business for 40 years), and it's the social media with which I'm most engaged. But just because Twitter has become something many of us use daily, even hourly, that doesn't mean it's guaranteed to be a good stock. And being a good stock should be the last thing on which Twitter's execs are focused. Do they really want to try to explain themselves quarter after quarter? Do they really want to be judged by their stock? Do they really want to stoop to the level of trying to convince investors that they should look at "geometrically eccentric circles," when the only thing that really will and does matter is the growth of monthly average users? The answer is "no." Must Read: Facebook Plunges Following Weak Guidance, Crazy Expense: What Wall Street’s Saying And if growth of monthly average users is slowing, as it is, investors don't want to feel like they're being spun, which was the case yesterday when CEO Dick Costolo said: You should think about the size of our total audience as a series of geometrically eccentric circles. At the core, you have our monthly active users. They are our most engaged users, contributing and consuming the vast amount of great content on Twitter. Those contributions are the fuel that powers the entire system. In the circle behind that, we have the logged out audience on our owned and operated properties, hundreds of millions of users that come to Twitter every month but don't log in. We've talked about the size of this group of users as another 1x to 2x the size the core, and that remains case. In the third circle beyond this are the people we reach in syndication via embedded tweets and timelines across the web. I'm a Costolo fan, but really? All of that explanation did, based on the reaction on Twitter, was get people to say: "Logged out audience? What's that?"aAnd from others, among my friends, asking: "Did he mean concentric -- not eccentric?" Then there's guidance. Why does Twitter give it? It always has and never should have. And if it stopped, investors would likely ding it for a quarter. But guidance does nothing more than put a target on Twitter's back. Meet the guidance and the company lives on for another quarter. Miss it and it doesn't. It's such a ridiculous and absurd game. Twitter, in my humble opinion, is better than that --aand doesn't have to be second-guessed by jerks like me. The way out: Sell to the highest bidder. And with a brand as big as Twitter's -- and it's a huge brand -- there will be a higher bidder. C'mon, Google , buy it already.a Must Read: 4 Stocks Warren Buffett Is Selling in 2014 Greenberg does not own shares, short or trade shares in an individual corporate security.a Editor's Note: This article was originally published at 7:30 a.m. EDT on Real Money on Oct. 28.


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