Twitter (TWTR: $16.20, up 10%) soared today after the company reported better-than-expected user growth for 1Q17. Twitter's monthly active users, one of the most closely watched metrics for analysts, increased by 6%, or 18 million, to 328 million in the first quarter from a year earlier.
Daily active users rose 14% in the first quarter from a year ago. Some analysts have said that they believe usage will drive meaningful revenue and profit growth in the next few years.
We’re not buying this story however. Listen to this: Revenue fell 8% to $548 million in the first quarter, its first drop since its initial public offering in 2013. Net loss was $62 million, or 9 cents per share, from $80 million, or 12 cents per share, a year earlier. Not good.
We will say this though: There is value in the stock as someday, sometime in the future, some giant company is going to make an offer for the stock. The market cap is $12 billion, a drop in the bucket for an Apple or Google, both sitting there with billions of dollars in cash. And there are probably10 other companies not mentioned that would love to have 328 million active users using their product every day.
Snap (SNAP: $21.50) We wouldn't touch this one with a 10-foot pole. Nor with any of our retirement assets. The latest numbers: $405 million in revenue in 2016 with a $370 million loss. What? Snapchat reached 70% of all 18- to 24-year-olds in the U.S. during 4Q17, but only 23% of all users over 35. In comparison, Facebook reached 88% of all people over 35.
Case closed.
Microsoft (MSFT: $68) set a new all-time high yesterday and again today. Market cap is $525 billion with well over $125 billion in cash. Our Target is $70. Yikes – we’re going to have to raise the Target soon!
Google (GOOG: $875) set a new all-time high yesterday and again today. Market cap just crossed $600 billion, at $610 B. Target is $900. Yikes – we’re going to have to raise the Target again soon!
Facebook (FB: $147) set a new all-time high yesterday and again today. Target is $160. Market cap just hit $425 billion. Yikes – we’re going to have to raise the Target again soon! This sounds like a “broken record” here. Love it.
A week ago on Wednesday with Tesoro (TSO: $80) at $77 we sent out a News Flash. We said: “Tesoro: Ignore The Noise and Buy the Dip.” Crude has been solid lately at $50 and Tesoro has moved up nicely since then. We are watching closely however, as US crude production goes up each and every month. If crude heads back to $40 we may just have to exit this stock.
PayPal (PYPL: $44) hit an all-time high yesterday and missed setting a new one today by 7 cents. We expect nothing but bigger and better numbers coming from the company in the current year and on through 2018-2020. We’re up 43% on the stock since we added it a year ago and our Target is $48. This one is not explosive; in fact, it is downright slow to move higher. But slow and steady works in our book.