Twitter at `Classic Bubble Valuation': Cecchini

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Nov. 1 (Bloomberg) -- On today's "The Roundup," Adam Johnson, Matt Miller, Julie Hyman and Olivia Sterns wrap up the day’s top market stories on Bloomberg Television's "Street Smart." Cantor Fitzgerald's Peter Cecchini also comments. (Source: Bloomberg)

Roundup." our stories that we are tracking ahead of monday's open.

I'm kicking it off with at&t. they are looking at possibly taking over voda phone, the largest european mobile carrier.

The two sides haven't yet started negotiations.

But at&t is looking at what assets they would like to keep and which they want to sell.

If at&t does actually buy vodafone this would create the world's biggest carrier by sales and a market cap of more than $250 billion.

Very briefly.

Fine, forget the market cap.

It would have 500 million subscribers.

Let me say only because they would get rid of the u.s. wireless assets.

They would get rid of the latin america assets.

They just want europe.

So the 250 is a big number, and that's only for everything, before they get -- and regulars will make sure -- the telecom business is not a fantastic business or a high-growth business.

What do you do?

You get bigger.

That's pretty much the way that you deal with it.

It gives you a scale.

You out-play google and other people who want the kind of discounts that you're going to now get from apple.

They need that pricing power, they need that size to be able to negotiate the subsidies of the handset makers.


All right, twitter has attracted more than enough demand.

All of its shares in the initial public offering, that's according to people with knowledge of the matter.

Banks managing twitter's market debut were getting sufficient interest from investors, enough that the i.p.o. could be oversubscribed before they start taking orders and pre-marketing this thing.

The microblogging site is offering 70 million shares for $17 to $20 apiece, which would price this at somewhere around 12 times sales.

What do you make of that?

Which is actually lower than a linkedin or facebook.

Are we going to see a caner store effect in the first day of -- container store effect in the first day of trading?

Going out o'a limb, but up 10%, 20%. i'm not going to say by how much.

Think about what you're paying, the price you're paying for the growth you're getting, right?

It sounds high to pay 12 times sales.

If you're getting something that has only 1/5 subscribers of facebook and growing faster -- but you could argue that it doesn't have the potential growth in subscribers that facebook has.

What's so interesting about the whole twitter i.p.o. story is that a lot of the users of twitter happen to be in the media or in finance.

So it's getting a lot of attention from the people -- by guys like us.

By guys like us.

Among the general population versus facebook, the user base is much, much smaller.

If i can just chime in for a second.

Please do.

Perhaps we've forgotten the last internet bubble.

When you can't justify cash flow, whether it's free cash flow or any earnings -- god forbid.

You move up to the revenue line.

This is classic bubble valuation and it's always relative to peers.

And, yeah, there will be some winners, but 12 times sales?

We've been reporting that the c.e.o. of twitter has been going around on the road show, and he's not even talking about when twitter is going to break even.

Nobody listens at road shows anyway.

Think about amazon.

It seems like the more at the sell, the less they make.

The margins are under 1%. they struggle to make money.

Yet, that's the world in which we live, isn't it, peat center it is indeed.

They don't make a whole lot of real money on that stuff.

.7%. let me move on to another tech bubble here.

Tough times ahead.

Tesla suffered its biggest one-month loss in october.

Investors are concerned that a five fold stock price out surged the price for the electric car company.

Tesla dropped 17% in october, first monthly decline since february and biggest since 2010. this is a company -- i've said it so many times, but it was worth twice fee at, which i know is still fiat, but owns ferrari, maserati, dodge, jeep, chrysler.

It's trading at 262 times estimated earnings.

That doesn't make sense?

Thank you.

Yeah, it's worth half of g.m., or it was before this drop.

So massive gains.

I know the cars are extremely popular with rich white men in california.

But otherwise -- oh, come on.

You need to really boost sales.

There's a story out that in eight of the 25 highest zip code counties in the u.s., it's the number-one selling car.

In the wealthiest zip codes.

Guess where those are?

They're not all in california and not all guys wearing suits, but literally all in california.

To even come close to justifying this 262 times estimated earnings, they have to grow.

Right now it is a boutique operation.

You're the expert on auto assembly lines.

How are they going to do that?

Very interesting story that popped up on my feed last week.

They get their batteries from panasonic.

So far panasonic has sold them 200 million battery cells and they have made about, what -- it will be 20,000 cars at the end of this year.

They just put in another order with panasonic for two billion battery sales, so 10 times the amount that they've used so far.

That's bullish, right?

That is a bullish sign, yes.

Well, it's confident.

It's confidence.

Musk is definitely bullish tesla.

Although, no, because he said we don't deserve the share price that we have.

He's bullish fundamentally.

Yes, he's bullish with the concept.

Another hot area of tech, we're looking at health app devices such as blood pressure monitors, once only in the hands of doctors are now increasingly in the pockets of consumers.

An app can track data from individuals and transmit it to their doctors.

This new technology has the potential to keep patients shoo are not in critical condition out of emergency rooms.

According to a report, the market for these health monitoring apps could reach $26 billion by 2017. let me give you an example of this.

The story on the bloomberg terminal says that a patient whose heart was racing, he called his doctor.

His doctor was actually on a plane.

But he was connected to the internet.

He was able to remotely see what was going on with the guy's heart racing and because it was reading from his iphone app.

He gauged the situation, told the guy to up his medicine effectively kept the patient out of the hospital.

This is obviously -- it's one of the most-read stories on the terminal.

Here's my one concern with this -- you're still talking about a $99 iphone app.

A lot of the emergency room visits that you see are people seeking primary care.

So it would be great if you could somehow also put this in the hands of people who are lower income, who are relying on the emergency room for that type of care and reduce -- and at a wall greene and wal-mart, they're trading walk-in clinics.

To keep people out of the hospital.

If you go to wal-mart you can get diagnosed on the spot.

As a matter of fact, walgreen bought a small private company which extracts blood through a needle that's barely, barely thicker than a human hair.

And then the blood can be diagnosed very quickly on the spot and you've got r.n.'s working there to actually then interpret the data and you can buy your medicine.

Maybe they're using fancy iphone apps.

They might actually get surgery at the wal-mart superstore.

Or from your iphone.

I don't know if i'm willing to go quite that far.

Moving on to the art world finally today.

Bank c has left the building.

The famous graffiti artist spent a month in new york.

He left his works of art all over the city.

One in particular sold at an online auction yesterday.

It raised $615,000 to benefit charity.

The group, housing works, provides support for those living with live aids.

Can we get a picture?

I think we have a picture of the picture that sold.

It was a landscape with a man in a nazi uniform.

What a killjoy.

We don't have the picture.

He also did sort of installations around the city.

He had a man shining the shoes of a statue of ronald mcdonald in front of various mcdonald's stores.

He had a truck with liberated stuffed animals that apparently went to a slaughter house.

[all talking at once] way to go.

He also set up a booth in central park in disguise and sold his works.

Sold them for $60 apiece.

They're worth a lot more than that.

One woman bargained him down.

Apparently that's him in disguise.

There we go.

Now we're talking.

So that's the dude, right?

I didn't realize that was him in disguise.

It was he himself in disguise was my understanding.

Sorry, the lifestyle you currently ordered is out of stock.

That's art.

He's an artist, but -- there's something artistic about that statement.

He's a provocateur.

That's really what he does.

I did a lot of art like that in high school as well.

Provocateur, as are we all.

That is your close, but we have your first trade for

This text has been automatically generated. It may not be 100% accurate.


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