Why You Need a Lot of Faith to Buy Twitter at $26

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Nov. 6 (Bloomberg) -- Twitter raised $1.82 billion in its initial public offering, seizing on demand for its shares to price the stock above a proposed range. Bloomberg's Cory Johnson and Jon Erlichman comment on Bloomberg Television's "Bottom Line." (Source: Bloomberg)

Stand by for a second.

I would like to bring in cory johnson.

He is in our san francisco bureau area talk to me about the dynamic we are going to see from the retail investors versus the institutional investors.

It is very interesting that twitter has 250 million users in the world.

Some of those people like twitter.

We know that on average, twitter users are going to timelines 7.1 times a day.

What that suggests is that there are these active twitter users who know this is a technology they like on some level and perhaps a lot of them will be interested in the stock because they like the product.

They are just going to think it is good and want to buy some stock.

That could affect the people trying to get in.

That is not a brilliant way to invest.

We might see some of that.

The valuation metrics that are important here -- as i look at this price of $26 per share, that is 34 times revenue.

You can't do it multiple on earnings because there are no earnings.

The adjusted numbers that these guys want us to look at, even on that very kind metric of a false prophet that doesn't exist -- you got to have a lot of faith to buy the stock at this price.

You talk about revenue.

We see revenue doubling almost annually.

What about a path to a profit?

Is there one?

I feel evangelical talking about a false prophet.

Banging something on a bible here.

I think there is a path to profitability.

We see some of those summers within the results.

We see an increase in revenue person's driver.

We see an increase in revenue -- per subscriber.

We see an increase in revenue on time i'm doing.

There are some hints that user growth could re-accelerate once i get done kicking off -- we shall see what this thing looks like.

The year-over-year growth you're seeing right now on the screen, i don't know if that is the best number to use.

I think that sequential growth is more important.

Users don't really go away on twitter.

I think the sequential number is more important.

It is an interesting business to watch.

It has affected a lot of people and should make tomorrow's market watching interesting.

Jon erlichman, does the twitter ipo sent a message to other tech companies that might be considering going public?

Are we going to see the floodgates open right now?

Certainly what has happened over the last couple of years in the ipo market has been based on a few high profile issuances.

You think about the lincoln ipo and the huge stock move on its first day of trading.

That opened the door for a whole host of ipos.

Some of them did not do that well.

When you had facebook go public and did not perform well in its first months of trading, that did dampen the mood.

It sometimes depends on what happens in the first three months of training.

Given the fact that the company was able to raise more money than it initially told us it would would suggest that issue issue -- this issue a profitability is not necessarily a threat.

It is perhaps not as big an issue with the people who will end up owning shares immediately as some might think.

It is also important to highlight the fact that you have insiders who are considering to hold their stock as opposed to selling it.

The stock is expected to start trading on thursday on the new york stock exchange.

Ticker symbol twtr, what can we expect tomorrow?

A lot of cameras, a big crowd around the post.

We will see.

Some stocks that have done rather poorly -- groupon comes to mind -- another company that was very sort of consumer internet facing business.

We will see what the reaction is.

Tomorrow certainly isn't the end dynamic we are going to see from the retail investors versus the institutional investors.

It is very interesting that twitter has 250 million users in the world.

Some of those people like twitter.

We know that on average, twitter users are going to timelines 7.1 times a day.

What that suggests is that there are these active twitter users who know this is a technology they like on some level and perhaps a lot of them will be interested in the stock because they like the product.

They are just going to think it is good and want to buy some stock.

That could affect the people trying to get in.

That is not a brilliant way to invest.

We might see some of that.

The valuation metrics that are important here -- as i look at this price of $26 per share, that is 34 times revenue.

You can't do it multiple on earnings because there are no earnings.

The adjusted numbers that these guys want us to look at, even on that very kind metric of a false prophet that doesn't exist -- you got to have a lot of faith to buy the stock at this price.

You talk about revenue.

We see revenue doubling almost annually.

What about a path to a profit?

Is there one?

I feel evangelical talking about a false prophet.

Banging something on a bible here.

I think there is a path to profitability.

We see some of those summers within the results.

We see an increase in revenue person's driver.

We see an increase in revenue -- per subscriber.

We see an increase in revenue on time i'm doing.

There are some hints that user growth could re-accelerate once i get done kicking off -- we shall see what this thing looks like.

The year-over-year growth you're seeing right now on the screen, i don't know if that is the best number to use.

I think that sequential growth is more important.

Users don't really go away on twitter.

I think the sequential number is more important.

It is an interesting business to watch.

It has affected a lot of people and should make tomorrow's market watching interesting.

Jon erlichman, does the twitter ipo sent a message to other tech companies that might be considering going public?

Are we going to see the floodgates open right now?

Certainly what has happened over the last couple of years in the ipo market has been based on a few high profile issuances.

You think about the lincoln ipo and the huge stock move on its first day of trading.

That opened the door for a whole host of ipos.

Some of them did not do that well.

When you had facebook go public and did not perform well in its first months of trading, that did dampen the mood.

It sometimes depends on what happens in the first three months of training.

Given the fact that the company was able to raise more money than it initially told us it would would suggest that issue issue -- this issue a profitability is not necessarily a threat.

It is perhaps not as big an issue with the people who will end up owning shares immediately as some might think.

It is also important to highlight the fact that you have insiders who are considering to hold their stock as opposed to selling it.

The stock is expected to start trading on thursday on the new york stock exchange.

Ticker symbol twtr, what can we expect tomorrow?

A lot of cameras, a big crowd around the post.

We will see.

Some stocks that have done rather poorly -- groupon comes to mind -- another company that was very sort of consumer internet facing business.

We will see what the reaction is.

Tomorrow certainly isn't the end of the footer story.

Cory johnson and our senior

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

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