Is Twitter (TWTR) overvalued? Here is my definitive take!
Discussed in this article: Twitter Inc ( $TWTR )
I want to look at Twitter (NYSE:TWTR ). Here’s the deal, I like Twitter (NYSE:TWTR ), I like TWTR, I also have a Twitter (NYSE:TWTR ) account, Dan Fitzpatrick, hey follow me. I love TWTR because it’s a moneymaker in both directions. I’m not going to suggest this I’m just going to tell you what I’m doing. I could not give a rip about what any of the analysts say about this stock, none of them, don’t care, they don’t know anything, they come up with these dumb expletive deleted price targets based on this that and the other thing. With all the shares that are being held there’s no real metric even as far as how to value this company.
The company’s not making money, I am absolutely sure that ultimately it’s going to make a boatload and I’m not putting down Twitter (NYSE:TWTR ), what I’m doing is putting down analysts. I hold them in the same regard as economists, which is not particularly high. So when you hear one of these yayhoos come out with some price target, whether it’s $40.00 or $140.00, it really doesn’t matter to me. You go ahead and listen to them all day long, but all they are going to do frankly, is confuse you. Because somebody comes out with a $40.00 price tag and because it’s so grossly overvalued, oh my gosh, Twitter (NYSE:TWTR ) is so grossly overvalued. I think it’s overvalued, but you shouldn’t care what I think about valuation either, frankly, it doesn’t matter what I think, as far as valuation. But you’re listening to some analysts and you think, wow, this stock is a $40.00 stock, there’s no way I’m buying this.
Meanwhile the stock breaks out and it keeps going up and you see it, see that’s your sin, you see it and you see it continuing to go, and go, and go, and you don’t buy it. Why? Because you’re stuck on some $40.00 price tag that some knucklehead that just graduated from business school a few years ago comes up with and thinks he knows how to value a company that nobody with and creditability really actually can value, you just can’t. So instead of getting in on this stock you listen to this silly thing. Or on the other hand, because there’s always another hand, Randy Travis told us that, on the other hand you listen to some analyst who gives you a $140.00 price tag, some where way up here, the stock prints a lower high, continues to fall, bounces up here, continues to fall. Ultimately the guy with the $40.00 price tag is looking pretty good and you’re holding the stock from $70.00, down to $50.00, down to $45.00 to $43.00. Why, because you’re fixated on this.
What I’m saying is, forget about those guys, let them give the price tags, let them give the estimates for the big fund managers who need to defend any picks that they have, and I totally get that. Ignore those, let the fund managers look at the analysts so that they can tell their clients why they bought a stock at $50.00 that’s now down at $12.00 and they can say, well the analysts were really bullish on the stock. Instead, I want you looking at these price patterns, look at the price patterns. First of all is this thing gappy or what? This thing has gapped almost every single day that it’s trading. The stock has gone up four days in a row, and I will say it’s gone up four days in a row because I’m starting here, where even though the stock closed down on the day it actually closed higher than it opened on this particular day; this was a big massive turn around day and then the stock continued to go.
I will make a confession, I actually shorted this stock on the 31st, I remember it was before I went out and did four fireball shots, don’t ever do that. I shorted the stock a bit on the 31st because I just thought; you know what this will probably be sold into on January 2nd when the market first starts trading. Well that didn’t happen so I covered at like 9:32. The thing is, now I’m looking at this not in this time frame, I’m looking at it in this time frame, like the 5-minute time frame. Now forget about these moving averages they don’t really much matter now I just haven’t changed them, do you really care what the 55-minute moving average says, no. What you want to look at here is the direction of the stock during the day, and what you see is, for the most part, the stock makes the move in the morning and then there’s a lot of sideways drift, gaps up, a lot of sideways drift.
What I want you to do is look at this level come Monday, which by the way was a really, really cool Jimmy Buffett song. If this stock starts trading below this support level that I’ve just drawn, and it traded on huge volume right at the end of the day on Friday, don’t you think we’re going to start to get some retracement? That’s what I think. Now, based on this now I’m looking back at the daily chart and it kind of makes sense to me. First of all there’s not a lot of data to go by here, but that’s the high. If the stock starts trading lower, we’re back to that 5-minute chart, the stock starts trading lower don’t you think there are a few guys, not the analysts, they’re still looking at balance sheets and eyeballs and posts and Twitters (NYSE:TWTR ) and tweets and whatever.
Don’t you think there’s going to be a few folks, other than you and me who are looking at the technicals and are saying, you know this thing had a pretty big move here, from below 60.00 up to 70.00 in the matter of a few days, but it didn’t get up to here, I think I’m going to take my profits. I don’t care about the chucklehead with the $40.00 price tag or the $140.00 price tag, I don’t care about that; all I care about is that this has been a pretty nice run and now I think this stock is rolling over, why don’t I go ahead and take those profits and then I’ll wait for a reentry on this stock. Or guys like me will look at this chart and say, if this starts trading below this level I think I’m going to short the snot out of it, I think I’ll make money on this stock on the way down. That’s what I’m going to do, that’s what I suggest you consider doing. In fact you know what? On Monday morning I’ll be in the forum for the members and we’ll be looking at this thing.