In 2009, I met and then sat down and interviewed Twitter co-founder Biz Stone on my show, Happy Hour, on Fox Business. Twitter, at the time, was just a few hundred days old, but already had tens of millions of users. We spoke at length about the timeline that Twitter might end up coming public and about whether or not Twitter was going to become a “Platform” or was a destination.
As I recall, Stone explained that he and the other directors of Twitter were in no rush to go public as they had plenty of access already to venture capital and other funds. And Stone told me outright, “Twitter IS a platform and always will be run as a platform, not a destination.”
Well, fast-forward to today and everything Biz Stone told me has proven out. Twitter took another four years to file for an IPO. And Twitter is a platform upon which thousands of other sites, apps, and uses have been built upon. As a matter of fact, the Scutify iPhone app and website that I am the largest shareholder of is partly built upon the Twitter platform, even as we also have a competing “Scuttles” platform that allows users to use 280 characters instead of Twitter’s 140.
I wrote extensively a couple weeks ago about platforms in the Revolution Investing newsletter updating my long-held thesis that investing in technological “Platforms” is key to long-term outperformance. And the platform concept is part of Twitter TWTR and Facebook’s FB -0.45% brilliant concept of creating platforms and allowing developers to tap into their huge critical mass of users and content which creates collaborators out of would-be competitors like Scutify or, say, StockTwits.
So what about this Twitter IPO?!! As you might have guessed, my inbox is now flooded with the big question on everybody’s mind, “Do I buy the Twitter IPO?” And my answer is, as I put it on my Scutify feed today:
“Sorry, but the Twitter IPO can’t be analyzed til we get more valuation metrics and numbers. If $TWTR comes public with a $100BB valuation, I’m not sure I’d want to own it. At $30BB valuation, I definitely would want to own it.”
Facebook’s valuation is now climbing towards the $100 billion mark, and I don’t think Twitter should be worth quite as much as Facebook. At a $30 billion valuation, Twitter would be worth about as much as Yahoo! and half as much as Priceline.
Recall that before Facebook came public, I’d noted that I’d want to short it if it came at the $100BB valuation that it’d likely turn out to be a great short before I then began a long process of loading up on Facebook common stock and call options when the valuation did indeed fall back towards $30 billion.
I’m frankly shocked to see all the analysts rushing to get their “Twitter IPO” and “Twitter valuation” calls out there already. There’s a long process of shopping the stock to clients and valuing the business at some level that will determine my own call on Twitter and its stock.
In the meantime, I continue to hold Facebook as my largest position even as I’ve trimmed it down since it’s gotten near the $100 billion valuation. I’m also long some$PCLN puts and I have no position at the current time in $YHOO, which was a mistake on my part for not having bought some of it when its own valuation was down near $15 billion last year.
