Twitter Inc stock is dying, and Trip Chowdhry of Global Equities research thinks he knows why. On the back of a Morgan Stanley report on Tesla Motors published on Monday, Mr. Chowdhry put out a report that called for the end of a boom in web stocks, especially those related to e-commerce and social media. There’s $1 trillion to be made somewhere else, and Mr. Chowdhry reckons that traders are losing interest in Twitter.
Transport as a service, which since the Morgan Stanley report has its own fairly common acronym (TaaS), is a trillion dollar market says Chowdhry, and Twitter has no place in it whatsoever. His dramatic claims, not the first he has ever made, aren’t being taken as fact on Tuesday morning, but it’s worth looking at.
Twitter Inc shares may never grow
Mr. Chowdhry reckons that the smart money, followed by the dumb money, will flow into stocks that are close to the TaaS sector. That means Tesla Motors, and Google. It includes Uber and Apple. Twitter won’t be in the segment unless the firm’s next CEO just happens to be Elon Musk, or at the very least his brother Kimbal.
If money flows into a group of firms that are trying to expose themselves to TaaS, it has to come from somewhere. Chowdhry thinks that money in the stock market tends to move from growth sector to growth sector, expanding multiples as it travels, boosting the apparent growth and bringing more money in.
Mr. Chowdhry says that Twitter, among other growth based web concerns, will become a “dead stock” in the coming months as money moves away from social media and into firms that will take advantage of TaaS. That, right now, covers firms like Tesla and Apple, neither of which are trading at or near all time highs set just weeks ago.
It’s clear that we’ll need more support in order to give any backing to Mr. Chowdhry’s theory, but it is an interesting look at the way the stock market works, if a little all-encompassing for the real working of the stock market.
Looking for Twitter
Robert Peck of SunTrust Robinson Humphrey reckons that Twitter will show the world its new CEO this week. He thinks it’s going to be Jack Dorsey, founder of the firm and the man in charge right now. That won’t be good enough if Mr. Chowdhry is right.
On Monday Adam Jonas of Morgan Stanley sent stock in Tesla Motors up by more than 5 percent after he said that the firm’s opportunity in mobility was almost the same size as that in making the Model S, Model X and Model 3.
Mr. Jonas said that Elon Musk’s firm would be one of the leaders in the area, and able to take a sizable chunk of the market once it matures. James Albertine of Stifel reckons Jonas is about right on the size of the market but, despite his bullish view on Tesla Motors, says that Tesla will fall behind Google and others in the race to get a self-driving car on the road.
Twitter isn’t in that race, and if Mr. Chowdhry is right it will soon become a dead stock, doomed to repeat ambitions for a turnaround over and over again just like Yahoo! Inc.