What Is Costolo's Long-Term Strategy for Twitter?

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May 5 (Bloomberg) -- Citizen VC Chief Economist Max Wolff discusses the eligibility of some of Twitters biggest investors to sell shares tomorrow. He speaks on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

Which is helping many twitter employees manage their portfolios on the show last week and he said the first cell lockup expires is the worst day to sell and most of the twitter employees they are working with not planning to sell right now.

Is that what you are hearing?

Yes, always a pleasure.

A couple of things have changed in the market the past few years.

There are specific things about the twitter story that make us feel like whatever downdraft is in the shares and be it's not a great selling opportunity and the world has changed a bit.

They're a second market liquidity in a waiter did not use to be.

You're not talking about people who watch this go from an idea to a $25 billion enterprise.

That has changed.

Twitter is a good story and a bit most -- misunderstood lately and it has been buffeted around by the risk on/risk off market.

Twitter shares are down more than 38% since the start of the year but they are up today.

How much of an impact do you think a lockup will have on the stock?

There is a mistaken belief that lockups are law, they are merely a sick just in.

Twitter had a weird lockup.

There already was an earlier lockup and they let them sell shares to cover their tax bills on february 15. the initial early lockup let non-executives cover their tax bills.

It was half $1 billion worth of stock and that came on locked -- unlocked at this particular point in february when the stock was well over $50 per share.

If you look at the performance of the stock, you can see the effect of those insiders selling to cover that tax bill and the stock got a really big bump on april 15. it's an interesting lockup strategy to let people who wanted to cover themselves get out and cover tax bill that would have resulted from the ipo.

Let's also remember they were able to sell in secondary markets before this ipo and there have been very few big companies like that to let insiders sell before the ipo.

I spoke with dick costolo last week.

There were questions about whether they can accelerate user growth.

Listen to what he had to say.

We have a very specific way of thinking about the long-term plan for the company.

It's about balancing investment and growth and operating leverage in operating efficiency.

That combination of growth, operating efficiency can, and leverages the way i think about how we will build the business and how we will build the company while always paying attention to the market landscape.

How do you feel, max, about his response to the critics, to the skeptics?

I think it makes little sense.

It strikes me as a touch academic.

I think it makes sense and they need to be careful.

For everybody with social, twitter is an 80% mobile story, how do you monetize your audience engagement without driving away the trendsetters?

That is always tricky.

On the other hand, it's not the most credible rebuttal to nasty commentary in the market focused on twitter lately.

I love his answer -- we have a very specific way to look at these three things plus the markets and we are not going to tell you.

When you and i looked at the numbers last week, we thought they looked pretty good.

Someone made a point to me that if you take the name twitter off the earnings report and looked at it and you stripped out all that information, are they being held to an unfair standard?

In a sense.

I cannot blame twitter entirely for selling the stock up the value with which people were willing to pay for it.

The fact is, they have a really high valuation for a growth story that is, part.

The fact that this quarter was a little better than the last one is good for them.

With this kind of valuation, you've got to achieve growth rates and show a clear path to profitability that twitter cannot do.

Cory johnson, thank you.

Max wolf, thank you.

We will be right back with more

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


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