Twitter IPO, Don’t Fall For It, Man!

Let me start out by saying, I am a huge fan of Twitter and an even bigger fan of Jack Dorsey, it’s co-founder.  You see, Jack is actually from St. Louis, Missouri, where I grew up, he went to a high school which I am very familiar with, and he is wonderfully brilliant and talented.  He’s a true Renaissance Man, with a vision I believe will take the internet to places far beyond where it is now.  Having this foresight to create products like his mobile payment processing portal, the Square and a passion to help struggling cities are frankly,  ideal leadership qualities I want to invest in.  If it were just investing in Jack, I would throw my dough at it!  The reality is, it’s not, its the Wall Street machine built in part to fleece the retail investors.   I speak about this Wall Street Casino frequently, and discuss my reasons for not wanting to take part in their ponzi scheme.  My article on Wealth Confiscation is one article which provides my opinion in full detail.

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The Real Money has already been made

Yep, that is true.  The big money, such as the Goldman Sachs of the world, are putting their capital behind Twitter, right now.  They approach Twitter, or vice versa while they are still a private organization and offer to fund capital investments (venture capital) for things like hiring top quality employees, product development and launches, building projects, legal needs, or just about any reason a private company may need cash.  So, Twitter gets this infusion of cash and an obligation to pay it back at X dollars per share, when it goes public in an IPO.  Going public, just means that the ‘market’ can now take an equity (Stock) or debt (Bond) position in the newly public company.  So, now mutual funds can add Twitter as one of their ‘holdings’ in a various fund.  But, back to my reasoning that the real money has already been made; the venture capital investment now has the ability to “cash out’, when the stock hits the open market.  Typically, an IPO such as Twitter will garner a large degree of hype before it’s IPO, and likely will move the stock price up on its first few days or weeks of trading.  The retail investor; people like me and you who buy Twitter in the early trading days, cause we just know this is gunna be the jackpot, are the ones who buy into the hype.  What you need to remember is, the smart money venture capitalists are the ones selling us their shares and cashing out.  We are the investment bankers pawns, we are the end user who get the scraps.  Keep in mind that, in order to buy a stock, someone has to sell it to you, and who do you think that is?   The smart money has moved on, you are the end user, so dont be fooled!

Twitter is not even opening the books prior to  the IPO

So, how do we value Twitter, to determine if the share price is even priced well?  You don’t, cause Twitter is filing a “Confidential IPO”, which means it is opening its books only to the Securities and Exchange Commission.  Red Flag anyone?  Yes, this really makes me nervous, especially since this confidential ‘slight of hand’ was made possible in 2012 by way of a provision in the Jumpstart Our Business Startup (JOBS) Act.  So, the retail buyers are going to be marketed to and persuaded that Twitter is this years “gotta have-it investment”, so jump on board while the gettin’s good!  All the while the investment capital is laughing at us, while they are pre-ordering the latest Bentley or drawing up plans for their Villa in the French Rivera.  Be wary! I for one, will not be investing in Twitter, I cannot contribute to the Venture Capital’s success, I think there are much better investments out there such as Cattle!!!

Monday Madness

Its time to highlight some of the great reads from my PF blogger friends, which I’ve discovered in the last week!  Enjoy and please visit em!

 

With the iPhone 5C coming out soon, I thought it was fitting to highlight a great article about it from Joe at stacking Benjamins 

Mr. CBB at Canadian Budget Binder wrote a great post on Stashing Cash, always a great thing to know about, huh?

Grayson wrote a great post on when you should ask for financial help, shouldn’t we all know our limits?

Tonya at Budget and the Beach wrote a great piece about the importance of Keeping a bucket list and the perspective of or finite time!

A few cool new blogs and posts I discovered this week!

lilsurbabanhomestead.com

thesavvyscot.com

couponchristine.com

centstosave.com

canadianperformersmoney.com

makinthebacon.net

 

 

 

 

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15 Comments

  1. I was actually quite surprised to see how much revenue Twitter is generating – especially considering that the concept doesn’t seem to have created with revenue generation in mind. Regardless, I wouldn’t be investing in the company – much like you I believe the real money has already been made.

  2. Troy says:

    Thanks for the link! Great website.

  3. I wouldn’t touch the Twitter IPO. How are they making money and maximizing revenue? Their sponsored ads are not really good and I just don’t see a lot of people jumping on board with it. I will pass.

    Thank you for the mention. I really appreciate the support.

  4. Wow, good info here, Jim, especially for a beginner like me. If we’d been looking to invest right now, Twitter may have been one of the ones we would have jumped on. Thanks for teaching me the scoop in IPOs!!!!!

  5. I think a lot of people may jump on the Twitter IPO, just like people did with Facebook. The general public can relate to social media companies because the majority of them have accounts in either of these. I’m not an expert on investing, but I know to stay away from these things. I prefer to invest in companies that I have an idea as to how they are run and how they are making their money.

    • Jim says:

      Well said Makin, That is exactly the way Warren Buffet invests, he only invests in things he understands and technology is not one of them!

  6. But, I’ll be making all sorts of money by getting into the IPO… 😉 Seriously though, I could not agree more. Back in my brokerage days, the IPOs, especially the tech ones, would always draw out all the nuts thinking they’d become millionaires overnight. The sad truth, is that I am more likely to be struck by lightning. The money has been largely made and unless you have upwards of six figures you won’t be able to even touch it until it hits the secondary market and you’ll be paying more IF it pops. That said, I doubt it will and am sure some snafu will happen like it did with FB. As for me, time will tell if they’re a good investment or not. Unfortunately, for every LNKD there are ten FB and GRPN.

  7. Jim says:

    Thank you so much for the mention!!

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