IB Net Payout Yields Model

Twitter Should Spend More

Twitter recently took a hit from Evercore issuing a Sell on the stock due to worries about underspending on R&D.
The social media company already ramped up spending, and sector data points support the company spending more on R&D.
Additional R&D spending that returns revenue growth to 20% places a $50 price target on the stock.
After a Q3 issue with ad products, Twitter (NYSE:TWTR) dipped below $30 on suggestions the company has underspent in the last few years. The numbers don't really support that the social media site underspent, but regardless, the company has the cash and the ability to substantially increase investments in research and development to build for the future. My investment thesis remains highly constructive on the stock around $30, with an enterprise value down to only $20 billion.
Read the full article on Seeking Alpha. 
Update - December 2

With CEO Jack Dorsey announcing plans to move to Africa in 2020 to focus on bitcoin, Twitter needs a new CEO. Jack needs to become the Chairman.
-Twitter chief Jack Dorsey said this week that he plans to move to Africa for up to six months next year. The tech executive announced the planned move following a month-long trip visiting entrepreneurs on the continent.
-“Sad to be leaving the continent … for now. Africa will define the future (especially the bitcoin one!),” Dorsey tweeted from Addis Ababa on Wednesday. “Not sure where yet, but I’ll be living here for 3-6 months mid 2020. Grateful I was able to experience a small part.”

Update - November 26

The stock appears set to close the gap at $38. Twitter isn't likely to break back above $40 with ad product concerns, but investors should definitely load up here while the stock is still at $30.

Disclosure: Long TWTR. Please review the disclaimer page for more details. 


jamuna said…
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