Jim Cramer, host of Mad Money, recently spoke on CNBC about Twitter Inc (NYSE:TWTR). He said that there are too many factors in play in terms of Twitter Inc (NYSE:TWTR) and its stock, and that it is better to sit this one out.
He mentioned that the “trifecta – beating own sales, earnings and raising their guidance for both sets of future numbers” is an important factor to consider in buying stocks. He also called new entrant Twitter Inc (NYSE:TWTR) “a money losing company with a decelerating growth rate” and said that Twitter Inc (NYSE:TWTR) is exactly the kind of company “this market showing zero patience for.”
He also said, “Twitter needs to grow faster and get more people engaged”. His opinion is that if Twitter Inc (NYSE:TWTR) became the news source for the masses, advertising agencies would spend more on Twitter Inc (NYSE:TWTR). He also mentioned that investors see more returns from Facebook Inc (NASDAQ:FB) than Twitter Inc (NYSE:TWTR), making Facebook Inc (NASDAQ:FB) the preferred choice.
He said that Twitter Inc (NYSE:TWTR) needs more revenue growth, not just more tweets. Twitter Inc (NYSE:TWTR) has future earning power, showing some growth, but nowhere near the earning potential of Facebook Inc (NASDAQ:FB), which will grow by up to $3 in 2016.
Cramer explained that advertising money could bring up Twitter Inc (NYSE:TWTR) stock value to $45, but without such ad money, the stock would go back to $30, and called Twitter Inc (NYSE:TWTR) a “battleground stock.”
“If this management team cannot monetize the unit growth, maybe someone else will”, he said, naming Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Yahoo! Inc. (NASDAQ:YHOO) as companies that could take a shot at turning things around for Twitter Inc (NYSE:TWTR).
The take home message from Cramer is to wait till after the Twitter Inc (NYSE:TWTR) report to decide whether to buy, given the availability of other safer, more attractive options such as Facebook Inc (NASDAQ:FB).77
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