A little more than a year has passed since social-media darling Facebook's badly
botched IPO gave Wall Street another black eye. Shares, which were issued at $38
on May 18, 2012, are now trading around $23.
Twitter, the social-media sensation best-known for its 140-character messages, is expected to go public at some point soon, prompting USA TODAY markets reporter Matt Krantz to ask: Should you buy it?
Kevin Landis, chief investment officer at Firsthand Funds, a tech investor and Silicon Valley insider, already has an $18 million stake in Twitter. He says Twitter is likely to be a better investment than Facebook, since Twitter's business was basically born on mobile devices. Facebook, by contrast is undergoing the difficult challenge of reinventing itself by de-emphasizing its desktop delivery method in favor of a service mainly via mobile devices.
Is Twitter worth investors' time? Facebook was valued north of $100 billion at its IPO. Twitter's market cap is estimated at $9 billion, and it has a mobile head-start, which makes it a compelling investment, says Landis. "Twitter was designed for mobile, it started on mobile," he says. "They don't need to worry about their mobile transition. And that's going to help that IPO quite a bit."
Landis explains why Twitter is his biggest position, at roughly 1 million shares: "Google knows what you're searching for, and based just on that, they have built an amazing money machine. Facebook knows almost everything else about you, besides just what you're looking for. So if you're in advertising, would you rather know what this guy's looking for, or would you rather know every other damn thing about him that he's put up on his Facebook page?" He says the latter is, potentially, more valuable and that Facebook could eventually rival, or even surpass, Google in market cap. (Facebook is $56 billion now, vs. $288 billion for Google.)
"Now, Twitter: When you talk about what Facebook needs to become for it to be mobile, you find yourself describing Twitter. And Twitter's valuation is only about $9 billion now, so it's much, much cheaper than Facebook, which is much, much cheaper than Google. So if you're right about it, in the long-term, it's going to work out for you."
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