Use ‘Play Money’ to Trade the Twitter IPO

The slight downturn after the Twitter IPO wasn't a surprise

   

Twitter IPO day has come and gone…and now  Twitter (TWTR) stock is down about 6% from the over 70% pop it saw on its first day of trading. That’s about as expected, as I discussed on CNBC:

Suffice it to say, at 45 times trailing earnings, Twitter is highly speculative at current prices.  Could it go higher?  Absolutely.  But investors are pricing in a massive surge of revenue growth that may or may not materialize.  This is a speculation for your “play money” that you can afford to lose.  It is most certainly not appropriate for your retirement nest egg.

Twitter is at the cutting edge of a media revolution.  It’s all very exciting.  But their business model is still untested and hasn’t turned a profit.

Should you invest in Twitter?  If you want to be a part of its media revolution, go for it.  But again, go into the trade with the right mindset.  This is a speculative trade in which you could make a fortune…or just as easily lose half your capital or more.  It’s not a prudent investment.

Charles Lewis Sizemore, CFA, is the chief investment officer of the investment firm Sizemore Capital Management. Click here to receive his FREE 8-part investing series that will not only show you which sectors will soar, but also which stocks will deliver the highest returns. This series starts Nov. 5 and includes a FREE copy of his 2014 Macro Trend Profit Report.


Article printed from InvestorPlace Media, http://investorplace.com/2013/11/twitter-ipo-sizemore/.

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