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Why I bought Twitter today

Well it wasn't the chart! Seriously, though, some people trade and some people invest - I do both. I trade the S&P 500 but I also have a portfolio of a half-dozen stocks (now seven!) that I hold. From time-to-time I may add or reduce the amount of money that I have in any particular holding, but they are what they are - permanent holdings (diversification is a farce, prove me wrong!). The subject of this post, though, is a rare addition to the portfolio, that I made today: Twitter.

Twitter IPO'd in November of 2013 at $26 (the public payed significantly more - it opened at $45.10) and ended the day at $44.90. It ended 2013 really strong, hitting a high of $70.87 on Christmas Eve. Pundits started questioning their ability to make money, though, and they started disappointing the street on user-growth numbers.

Our Q2 results show good progress in monetization, but we are not satisfied with our growth in audience
-- Jack Dorsey

It was all downhill from there and Twitter hit a low of $29.51 in May of 2014, just six months after its successful IPO. Twitter hit its all-time low of $13.73, in May of 2016 (the 2015-16 bear ended in February). Twitter toiled for a long time in the teens, but was back into the mid-$40's last year, before tanking back into the $20's, this year. But along the way, Twitter figured out how to make money. Actually, they hired a bunch of adults to run the place, which was a super smart move, and one that's not easily undertaken by founder-run companies.

Video, in particular, is now over 50 percent of our revenue and marketers are getting great results from using it.
-- Matt Derella, Global VP of Revenue & Content

Yeah, that's a whacked title for a BD guy, but the results speak for themselves. Who would of thought video ads on Twitter would be a thing? I didn't. And I'm a BD guy! This past year, sales are up 7% per quarter through Q3 and a surprising 20% in Q4. That's pretty exciting, if they can keep it up. I'm not betting the farm that they will, but I am betting something (about 6% of my portfolio, actually).

Another adult in the Twitter room is CFO Ned Segal. It takes about five seconds to evaluate a public company's CFO - just look at the earnings history. A good CFO will have a nickel in his pocket every quarter, and Twitter is doing pretty well. Last year, they beat by $0.04 in Q1, met results in Q2, beat by $0.07 in Q3, and beat by $0.06 in Q4. Segal was hired in July of 2017. If sales are under control (Darella) and costs are under control (Segal), it bodes real well for Twitter, going forward.

Outside of the tangibles, you just can't ignore Twitter's place in our culture. Google is a three-time failure in all things engagement and Facebook's primary engagement vehicle has shifted from the news feed to Instagram, which they bought in 2012. The difference is that everybody who's anybody has a Twitter account. Presidents, Popes, terrorists. That can't be said about Instagram, or any other engagement platform. Not even Netflix. If Twitter is going to be one of my permanent holdings, it makes sense to make a case (an honest case) that Twitter will still be relevant, thirty or forty years from now. That's a tall order for any company.