American Consequences - August 2021

since the closing price on the day of the IPO through now. Let that sink in... Now, sure, lots of companies underperform the S&P 500. Lots of investors do, too. But few companies are so bad at filling the space that they occupy... and leaving so much cash lying in the corner, untouched.

shares to the public) of tech companies that have turned out to be revolutionary usually is a great way to get rich... with the important exception of Twitter . Shares of Alphabet (formerly Google) are up nearly 5,000% since the company went public in 2004 (that's around 12 times the S&P 500 Index's return over that period). Facebook is up around eightfold since 2012, and today is valued at 20 times the market capitalization of Twitter's $50 billion. Since its IPO in 1997, Amazon shares are up nearly 2,000 times (enough to turn $10,000 into $20 million). Microsoft – up nearly 3,000 times since 1986 – is valued at more than 40 times Twitter. But Twitter – which punches in the same weight class as these companies in terms of impact, reach, influence – isn't even in the same universe in terms of returns. Since Twitter sold shares to the public in late 2013, its shares have risen 49%... If you'd bought shares of a boring old S&P 500 ETF then, you'd be up three times as much. That's assuming that you bought TWTR shares after the first-day share-price pop – and were not one of the lucky few institutional investor insiders who bought at the actual offering price. If you were able to buy at the actual IPO price of $26/share (compared with $62 today) and suffered through dips and valleys – Twitter shares have fallen by more than 50% within a year several times – you'd be up 138% (vs. around 150% for the S&P). In other words... Twitter shares rose more on the first day of trading than they’ve risen

MONEY LEFT ON THE TABLE, CASE NO. 1

Twitter has been world-class at uncovering (or stumbling into) the next big thing, and then putting a dagger to the throat of its golden goose... just before someone takes a very similar idea, tweaks it a bit, and then goes on to create enough wealth with it to make King Solomon feel like his gold mines are lacking. First... in March 2015, Twitter bought Periscope, which was one of the first companies to get a handle on livestreaming (which – as your grandkids could tell you – is online streaming media content that’s like personal TV, in that it’s recorded and broadcast at the same time, in real time). It was the popular new kid in town, for a while. Then Facebook – with around five times more users than Twitter at the time – got into livestreaming and sucked some of the air out of the room for Periscope. And meanwhile, gaming live-broadcast startup Twitch ate the rest of Periscope’s lunch. Twitch allows gamers to stream their screens so that others can watch them play video games (yes, that’s an actual thing). Amazon bought Twitch in 2014 for nearly $1 billion. Most of Periscope’s livestreaming functionality

American Consequences

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