Facebook, Twitter and the markets: Hit or miss, win or lose
Like I said in this week’s Live Q&A Chat — Feet to fire, I’d be looking for a temporarily range bound market here for a few days maybe, and then maybe a headfake of a 1-2% up day in the markets and then after that we’ll have another down whoosh of 3-5% or so and then I’d look to start scaling into some of our long positions and new trading/investing ideas with some tranche buying. Indeed, I don’t think this bubble-blowing bull market is over yet, as I could picture the Nasdaq getting close or just above its old 5000 high from the dot com bubble in 2000. That’d give the chartists all a big ol “Double Top” pattern to talk about.
In the Chart of the Day from Wednesday, I wasn’t suggesting that the markets are topping out right now and are about to crash like they did in 2000 and 2008. I am just showing how tiny the current pullback has been in the grand scheme of things and that we shouldn’t think seeing a few of our stocks on discount from a few weeks ago is somehow a magical opportunity to load up.
Let’s see what the market brings us though, because it will do what it will do and let the prices and timing of our stocks dictate what trades we make next. Which leads us to Twitter.
This ugly $TWTR action is the type of thing that can panic out the momo traders in the broader market too. Patience is what I’ve been preaching so far this year and still am. Elad Ryba said it best “$TWTR down $15 . $AKAM up $14. Hit or miss, win or lose. Very tough.”
Earlier this week, I wrote “I’ve spent a lot of time analyzing and laying out my bullish case for $FB and clearly but in a nut shell, the reason I own $FB and not $TWTR is because I don’t think Twitter will be able to monetize as well over the next few years because of a lack of innovation and rich-media content.”
Last night’s Twitter earnings report and the lack of traction the company’s site vs. the accelerating traction that Facebook’s model is showing underscores the further details I wrote about in that report too: “While Twitter was dinking with the colors of their old website, the Scutify website and apps have now had a huge running start and are seeing the positive feedback loops of garnering ever more users which brings ever more contributors, which brings ever more users. And StockTwits and Scutify have already innovated the ability to let users literally “follow” stocks, and not just other users. Finally, why the headache of having to deal with the old Twitter 140 character limit? We did away with it at Scutify. I’m sure other sites, apps and networks have already far out innovated Twitter for this particular and other demographics. Twitter could have and probably someday will try to catch up with us, but notice that I didn’t mention anybody out-innovating Facebook?”
There’s an old saying that it’s never a stock market but always a market of stocks. Akamai and Facebook and Google $GOOG have delivered strong growth and in this bubble-blowing bull market, that’s made all the difference, at least for this earnings period. I think that pattern is likely to continue as good reports will be bought and bad reports will be sold. Such action is indeed likely to give us a sideways, rangebound market as I started off theorizing about in the opening paragraph of the column. Steady as she goes, really, despite and/or because of the Twitter disappointing its investors and momo-traders last night.
