Citron was previously bullish on TWTR in the low $20’s.
The stock is up 50% in just two months since our trading call.
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:
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.