Twitter's sputtering user growth unnerves investors (opens in new tab)

I did pretty well selling call spreads on Twitter. Sadly, I also had the same thesis for Yelp and Zynga.

Well, in this case a P/E of 500 would already be a massive improvement. Twitter currently has a negative EPS (aka, no profits at all), so it doesn't even HAVE a P/E.

> I wonder if this bubble will deflate slowly or crash and burn like it did back in early 2000s.

Crash, probably, but not like in the early 2000s. The key difference now is that the internet is established and has multiple viable business models. Netflix has a P/E of 200, it wouldn't be surprising to see its stock price plummet from $400 to $40 (where it would then have a more sustainable ~20 P/E). But that won't change that the company is actually making money and has a profitable business model.

However that doesn't help the various startups and such that don't have viable business models, like Twitter which just keeps bleeding money with no sign of stopping.

Many of the VCs get in on the A-round, pump it up to the next VCs for the B-round, pump it up get it to IPO, and then they have their liquidity event where everyone cashes out.

The biggest thing that irks me is tech companies reporting non-GAAP numbers as their top-line results on earnings reports. These are baked-up numbers to make companies' large losses (or possibly small profits) look deceptively better than they actually are.

VCs know this. That's the reason they hype startups and ask young folks to "drop out and startup'. They are bound to make money somewhere (1 in 10 startups that IPOed big). Silicon valley is a big money sucking machine.

Btw, the Wall Street firms involved in underwriting the IPO already made a ton of money. The remaining guys fought over scraps and are making money now by strategic shorts and selling existing stocks to a greater fool.

It's quite pathetic really. "Changing the world" is quite possibly the last thing most startups are doing.

I thought twitter played a role in Arab Spring. They are a good company with a niche global impact. But they definitely did not command such a big IPO IMHO.

Of course I'm saying all this retrospectively. I don't have a time machine.

Genuinely curious where you draw the line between "wall street" and the "rest of the country", especially with regards to creating "no real value".

I'm sure the vast majority of posters here have a car loan, student loan, or mortgage, which is just one example of where your pejorative use of "wall street" generates value.

As you say, "SV" (or the tech world in general) may be far more guilty of sucking wealth with no real value added.

Read up on John Michael Greer's concept of "catabolic collapse": http://ecoshock.org/transcripts/greer_on_collapse.pdf

I find a great deal of parallelism between Greer's observations and Marc Andreesen's "Software is eating everything". The two great economic sectors of the past 20 years in the US have been the FIRE industries (finance, insurance, and real estate), and software / IT.

Broadly speaking, a society facing the end of an anabolic [growth] cycle faces a choice between two strategies. One strategy is to move toward a steady state in which C(p) = M(p), and d(R) = r(R) for every economically significant resource. Barring the presence of environmental limits, this requires social controls to keep capital stocks down to a level at which maintenance costs can be met from current production, and maintain intake of resources at or below replenishment rates. This can require difficult collective choices, but as long as resource availability remains stable, controls on capital growth stay in place, and the society escapes major exogenous crises, this strategy can be pursued indefinitely.

The alternative is to attempt to prolong the anabolic cycle through efforts to accelerate intake of resources through military conquest, new technology, or other means. Since increasing production increases W(p) and increasing capital stocks lead to increased W(c), however, such efforts drive further increases in M(p). A society that attempts to maintain an anabolic cycle indefinitely must therefore expand its use of resources at an ever-increasing rate to keep C(p) from dropping below M(p). Since this exacerbates problems with depletion, as discussed above, this strategy may prove counterproductive.

Yes, software provides efficiencies, and some of the recent chain of startups (Google, Twitter, Facebook) have succeeded in ephemeralizing knowledge, communications, and networking in ways which, to an extent, increase social interaction, but they're doing so at the cost of a highly confounded signal/noise ratio, and with significant externalities.

Then there's the whole "moving financial capital around" aspect of tech funding and investment, which I'm coming to increasingly question. I don't find it particularly productive. The number of firms whose exit strategy is "get bought by Google / Facebook / Apple" reminds me strongly of the late 1990s "get bought by VA Linux" (remember them?).

And for perspective, I'm in my mid 40s and have seen a few cycles so far.

What about a company with a size of $100Bs and PE of 500? :) Everybody knows who I'm thinking of ...

Basically mobile usage will plateau and the market will correct itself in response. I'd say these companies will get a boost from international but it seems emerging markets are growing much more slowly than anticipated.

Twitter should seriously consider making people you interact with get precedent in the timeline. That would allow you to see tweets from people you know IRL easier and make interaction more common.

I really think Twitter could have been better off by selling developer access to the pipes. Charge by the user or by the api call. Some way to still encourage the 3rd party platforms while also seeing some monetary benefit from it.