Stocks

Citron Short Twitter Inc (TWTR)

Citron was previously bullish on Twitter Inc (TWTR) in the low $20’s.

The stock is up 50% in just two months since our trading call.

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david einhorn going long on twitter stock
joshborup / Pixabay

Next! A Lot has Changed!

As previously announced we sold our long position and are now short Twitter (NYSE:TWTR).

Alongside Facebook and Google, Twitter is now being hauled in by Senate Judiciary Chairman Chuck Grassley (R-Iowa) to a hearing on data privacy on April 10.

Wait until the Senate finds out that:

Twitter Will Generate $400 million THIS YEAR, by just selling user data. Not advertising.

How important is Data Licensing to Twitter? The Scary Answer

In 2017, ad revenue declined to $2.11 billion from $2.25 billion in the prior year while data licensing revenue grew to $333 million from $282 million in the prior year.

TWTR CFO Ned Segal on Q4’17 earnings call last month that data licensing is “a really high margin business”. TWTR generated $333 million in data licensing revenue in 2017.

If we assume 100% margin, this segment accounts for almost 80% of total profits.

Twitter makes this money from selling user data even from private messages — and yes a lot of “dick picks”. To see the underbelly of Twitter just watch this undercover investigation done by James O’Keefe and other Project Veritas reporters:

https://www.projectveritas.com/2018/01/15/hidden-camera-hundreds-of-twitter-employees-paid-to-view-everything-you-post-online-including-private-sex-messages/

Dynamics Are In Place to Short Twitter

Twitter’s valuation gap with FB and GOOGL has widened to largest spread ever. On 2018 P/E (ex-cash), FB and GOOGL trade @ 16-17x vs. TWTR @ 50x.

Over the last year, insiders have sold/surrendered almost $300 million of stock. The last time there was this much insider selling was in 2015 when the stock was $50 and then preceded to fall to $14 over the next year.

Short interest is at all-time lows at 4.6%

Acquisition by another party is far less likely until these companies clean house with regard to privacy concerns and selling user data.

Article by Citron Research