February 11, 2015

Doug Kass on Twitter earnings

Twitter has been a very successful investment for me over a brief period of time (of less than two months). 

I initially put TWTR on my Best Ideas List at $37.35 on Dec. 12, 2014 and I have twice added to my holdings at about the same price over the last several weeks. 

In response to the better-than-expected results, Twitter's shares are about 20% to 25% above where they were last week (when I added, for the third time). I have also observed a tendency, many times, in which the initial response to better results (especially of a social media kind) tends to be exaggerated and sometimes short-lived. There have been many examples of this in the social media space. GoPro, Yelp and others are coming to mind.

I think that while Twitter might be among the best in the space, given in part my cautious market view and my generally downbeat opinion on the valuations of social media stocks. I expect Twitter's shares to back and fill over the near term and to fall back into the low $40s from the after-hours high of $46.40 on Thursday night.

That said, in the fullness of time (perhaps as early as the second half of this year), I would not be surprised if the share price has a $5 in front of it.

I am now left with tag ends -- though given my upbeat intermediate term outlook for Twitter, the shares remain on my Best Ideas List.