Is trying to be reasonable, cautious, an about-face from what facebook presented.
What is your impression?
Is it succeeding?
I think it was important, especially since those that were involved in pricing facebook has basically shown themselves -- their faces in public, because it was such an embarrassment that it was privatized and fell.
They are doing everything they can.
For example, there's no movie about the doubters of twitter.
They are doing everything -- about the founders of twitter.
They are doing everything they can to keep it limited.
This is a changing culture in media and entertainment.
They know there will be a certain amount of hype and they are taking responsibly to lessen the expectation.
You come at this from a completely different perspective, james.
Describe what you do.
We evaluate company's financial health and we have a zero to 100 ratings score that evaluates how well a company is positioned to compete against peers, how efficiently they are run.
And you found that twitter is not so hot.
It has room to improve.
It is currently at a 19, which for context, about 19% of companies that have failed in the past 20 years have been at 40 and below.
It has a lot of room to improve.
Jeffrey, does that matter to you, when someone is looking at it from that perspective?
And they say there is a lot of room to improve?
Oh, yes, what james said is crucial.
This company has a lot to prove.
Realistically, they have a world of potential ahead of them, but anyone who gets overly enthusiastic about it right out of the gate is kidding themselves.
They really have to prove they can execute on where they can genuinely -- generate revenue.
James, i wonder, you do the financials of a company through proprietary screening.
What does your screening turn up from all of the information from the public filings?
When you look at an s-1, you're looking at an individual company by itself, so it is a little bit out of context.
We have about 12 million company years worth of financial statements that are used as a benchmark for any company.
What is the most troubling for you?
There is not one.
If you look at the overall efficiency, six different performance categories for every firm, and interestingly when you look at twitter, and if you compare it to the recent ipo's any textbased in the past year -- in the technology space in the past year or so, and you compare it to the bubble of 1999, you also see a similarity between twitter and those companies.
Cristina alesci, i know you want to jump in as well.
You mention that twitter's score was a 19. what was facebook's score when they went public?
They went public at a 74. a significant difference.
And really, one of the big differences is that facebook, over time, has demonstrated an ability to raise capital, to increase revenues with it, but also to increase profitability in a correlated way, which twitter has never been able to do.
The $700 million that they have already raised to date, they have not made any money with.
I feel like this is a different company than we were talking about earlier.
I'm used to hearing so much positive momentum among twitter.
People are happy usually that 70% of its revenues are around mobile.
Evil are happy that they have -- people are happy that they have all the users they do.
But they do not have patents.
They have not been in strongly -- in strong support of patents.
If you look at it from a positive standpoint, based on the deal with nbc universal -- they sign real deals with retailers and start to get into entertainment, and they couldn't monetize -- they could monetize this massive base that they have.
If you look at it really, they are coming into the tech frenzy.
They will coattail some of those gains.
They are certainly riding on some big coattails.
James, i know you look at debt management.
And twitter has secured a $1 billion credit facility.
That is almost as much as it is raising in this ipo.
Does this forcing twitter's credit -- does this worsen twitter's credit profile?
It depends on how they use it.
And there is no guarantee they will use it.
We should assume they will use it.
And to jeffrey's point, there is no patent efficiency.
As they use a proceed, as they draw down some of that revolver, it will be for acquisitions and internal investments.
They need to be building the app -- the asset base of the company , whether through acquisitions or otherwise.
Like i have a question for james.
We have seen -- i have a question for james.
We have seen a run-up in tech ipo's this year.
Is that a concern for investors?
We have seen them outperform other asset classes, and they are up 60%. are we seeing a top?
How does this compare to other times in tech ipo's? what we are seeing in sending super and it's -- is an exuberance.
There are very good offerings for most of the tech ipo's. the investor needs to be cautious.
They are not just jumping on the bandwagon of increased users, increase revenues, and a great tech ipo market.
But they are actually looking at the fundamentals.
And if they do invest, track it on an ongoing basis to be sure that the evolution of the company and the developments of the company are meeting the expectations that the company is setting out, that they will be able to actually do the things they are saying they will do.
And one of the -- heart of that depends on the management team in place.
What do you think about the current ceo?
It's either right guy to lead through these challenges?
They have gone through these management changes and because of the way the offering is structured, they will not have the level of control that facebook had.
But there will be a significant time of testing.
They have to monetize and they have to show us they can monetize.
And going back to the whole tech frenzy we are seeing now, if you look at what hastings said from netflix, exciting why his stock had moved up so much, he is saying it is momentum, a breath of fresh air.
He is saying, i see momentum.
It is not really fundamentals.
If you look at it that way, we are in the midst of a lot of rationality here.
That will most likely carry into twitter.
We definitely do see that
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