Welcome to stocks in the news where the headline meets the trendline.
Stock Number One: Twitter. (SYMBOL: TWTR)
And the headline says: Twitter surges 74% in market debut after pricing at $26 a share– CNBC
“Twitter opened at $45.10 a share, more than 70 percent above its IPO price of $26 a share. The stock is trading under the ticker symbol TWTR,” says CNBC. “On an interview on CNBC, Twitter CEO Dick Costolo said investors should not be concerned about the company's current lack of profits, because it's part of a plan to invest for the long term. He also said employees had agreed to an 180-day lockup.”
Anyone who would tell you not to worry about losses because it’s a part of a broader plan isn’t being quite candid with you. Ultimately stock valuations come down to whether a company can monetize their product.
Twitter has not shown an ability to do that yet. Until they do, Twitter is not an investment.
It’s a reality show disguised as an investment.
I can’t predict the future, but I would expect a pullback from these were trading ranges once reality sets in.
Our Ransom Notes Trendline says: Avoid Twitter
Stock number two: Suntech (SYMBOL: STP)
And the headline says: Sun Sets on Suntech’s U.S. Listing– Wall Street Journal
“China’s one-time solar champion is about to be delisted from the New York Stock Exchange,” reports the Wall Street Journal. “The move caps a dramatic reversal of fortune for Suntech Power Holdings Co. %, which raised $400 million in an initial public offering in 2005. Suntech’s IPO was the largest in the U.S. for a China-based company that year, and it was so successful that Suntech’s founder, Zhengrong Shi, was later asked to join a NYSE advisory committee.”
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Take Suntech as a cautionary tale that even the full faith and credit-- and the dollars-- provided by the United States government cannot guarantee a company will be successful.
In fact, Suntech demise was probably a direct result of Obama’s huge government-sponsored investment in solar.
The company is a mess and it’s likely that it won’t even be able to complete its annual report.
It also can serve as a cautionary tale for China companies. Despite being powered by the sun, it apparently isn’t that transparent, having stopped releasing financial reports.
Our Ransom Note Trendline says: Suntech is Dead to Me
Stock Number Three: HomeAway, Inc. (SYMBOL: AWAY)
And the headline says: HomeAway Reports Strong Q3 Earnings– Zacks
“HomeAway, Inc. reported adjusted third-quarter 2013 earnings of 12 cents per share, exceeding the Zacks Consensus Estimate of 10 cents,” says Zack Investment Research. “The adjusted earnings per share exclude one-time items but include stock-based compensation expense. Investors responded to the reported numbers, sending shares up 13.1% in after-hours trading.”
With the news Home Away moved past some resistance. It will be interesting to see where closes today. If it closes above $34 that’s good. It could climb higher.
The problem is that the valuations are skewed quite a bit. It’s currently trading about 142 times it’s trailing earnings and 45 times it’s forward earnings
Our Ransom Note Trendline says: Avoid Home Away
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