I appeared on CNBC’s Capital Connection in Singapore this morning to discuss the Twitter IPO.
Suffice it to say, at 45 times trailing earnings, Twitter is highly speculative at current prices. Could it go higher? Abolutely. 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.
This article first appeared on Sizemore Insights as Sizemore on CNBC: “Buy Twitter With Your Play Money, Not Your Real Money”