I joined CNBC’s Capital Connection last night to talk about the changing of the guard at Twitter (TWTR). Dick Costolo is out, and co-founder Jack Dorsey is back in as Twitter CEO.
Is this Dorsey’s “Steve Jobs moment?”
Well, maybe. Like Dorsey, Jobs was forced out of the company he founded only to come back years later and completely redefine the company. But for Twitter to have a renaissance like Apple (AAPL), Dorsey needs to have a vision. And as of now, it’s not clear that he does.
Twitter’s biggest problem is that, while popular with celebrities, journalists and public figures, it still has yet to really catch on with regular people. Rival Facebook (FB) has over a billion more monthly active users as of the most recently released figures, and Facebook is constantly changing its product to keep it fresh. Twitter looks virtually the same today as when it was founded.
Could a Google (GOOGL) takeover be in the cards?
Those rumors have been circulating for months, and Google certainly has the cash. Google’s weakness in social media also gives it the motive. But as I noted in the interview, Twitter is still a very expensive company, even for Google, and it’s not clear that Google would have any more success in monetizing Twitter than its current management team has.
Is there a trade here?
Not really. Twitter is still a very expensive company, trading for 15 times sales and roughly 100 times forward earnings. It’s also a serial shareholder diluter via excessive stock-based compensation. The best trading move here might be to sit on your hands.
Charles Lewis Sizemore, CFA, is chief investment officer of the investment firm Sizemore Capital Management and the author of the Sizemore Insights blog. As of this writing he was long AAPL.