How Twitter Can Instantly 10x Their Valuation
- Posted by Joe Fahmy
- on September 17th, 2013
This is an open letter to @jack, @biz, @ev, @dickc, Twitter executives, @fredwilson, and all other Twitter investors.
I originally joined Twitter for the porn and free iPad offers (they say start every speech with a joke, right?). I immediately found tremendous business advantages from it. Through @howardlindzon’s StockTwits platform, he allows me to share my stock ideas and thoughts on the markets through a medium that didn’t exist otherwise. I provide content and if potential investors are interested, they contact me. Through tweets, retweets, and links, it REALLY IS AMAZING how viral this has become and how many people reach out to me. While you are preparing for your IPO, here are a few thoughts:
1) CHARGE MONEY FOR USING TWITTER!!! You guys are all brilliant and I’m sure you realize how disruptive, revolutionary, and addictive Twitter is for most of your users. Ballpark suggestion: Charge $19.95/month or $99/year to use Twitter. Even better, have Square be the EXCLUSIVE merchant that people use to pay for their subscriptions (just looking out for you @jack).
2) Conservatively, you could get 50 million users to pay $99/year and that would increase your current revenues from $1 Billion to $6 Billion. Over the past 4 quarters, Facebook reported approximately $6 Billion in revenues and they have a $110 Billion market cap. According to recent estimates, Twitter’s market cap is around $10 Billion.
3) Trust me, PEOPLE WILL PAY! This won’t be a Netflix situation where your users will be turned off by some price increase. Even if you lose some users, look at who you’re losing? Spam accounts, teens who follow pop stars, and a bunch of other riff-raff. If anything, you will make the Twitter experience more enjoyable due to less spam. If some teenager REALLY wants to follow @LadyGaga, let their parents pay for it. By the way, the number of users is not important. Facebook reportedly has 1B users, but we all know many of them are inactive accounts.
4) You’ll get rid of anonymity. For example, when @DoucheBagTrader69 tells me I suck, I don’t care because that person probably lives in their Mom’s basement and I feel bad for them. However, when someone makes a serious accusation or threatens someone’s life, they might think twice because their information can be easily traced. I’m sure your legal department will have a significant DECREASE in cases and complaints.
5) Once people start paying for the service, you can charge them for add-on products such as Vine, etc. They’re already spending money, so they’ll probably spend more. As the casinos say, just get them in the door and they’ll spend money.
6) I’ve studied big winning stocks throughout history, and one thing many of them have in common is they revolutionize our lives. Twitter has changed the way we communicate and how quickly news and information is disseminated. I’ve heard about so many news events WAY BEFORE they are covered on CNN. I’m sure you saw @carlquintanilla’s Twitter Revolution special where he highlighted this point.
7) Life is all about timing. The way Social stocks are trading right now reminds me of the dot coms in the late 90s. Companies such as $FB $LNKD $YELP $Z are performing very well and will most likely continue to surprise investors to the upside. One thing I’ve learned about the stock market is that moves can go on much longer than people expect. Take advantage while your sector is hot and maximize your valuation!
One final point I would like to stress: Twitter is EXTREMELY addictive for most of your users. I recently found out that people actually PAY for Twitter followers! I’m not sure how insecure you have to be to do something like that, but people actually do it!!! Heck, if they are paying for followers, make them pay more to use Twitter (for example, an additional $99/year per X number of followers). I’m sure they would pay extra to get their message across to a bigger audience. You know why stocks such as McDonald’s, Philip Morris and Starbucks have done so well over the years? Because people are addicted to their products! I talk to enough people who are EXTREMELY addicted to Twitter, and they would gladly pay up to feed their addiction.
I can be reached at: [email protected].
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Joseph Fahmy is the managing director at Zor Capital, LLC, a New York based investment management firm. Joe has over 17 years of trading experience...More »