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You're Out!

Updated: Apr 14, 2022

As you may have noticed, The Worst Bets blog has welcomed two new junior contributors (who will be working under me for the next few weeks as unpaid interns) and received a much needed facelift to our landing page. This reorganization is a sign of positive change at our growing firm, but we weren't the only ones shaking things up this week. Jack Dorsey, the Co-Founder and CEO of Twitter, resigned from his post this Monday. Dorsey, who was once revered as a tech guru, has struggled for years to maintain a positive image among public shareholders and more recently has battled internally with Elliot Management, an activist hedge fund that owns a $2bn stake in Twitter. His departure marks the end of an era of complacency for the social media platform and what I believe to be the beginning of Twitters rise.

Since taking the company public in 2013, Twitter has seen a less than modest 10.2% total return. During that same time period, VGT, a popular Information Technology ETF, has a total return of 282.87%. It isn't hard to see that compared to their competitors, Twitter has failed to produce a profitable business model that properly leverages that user's they have amassed over the last decade. A user base, by the way, that is ranked 5th in global daily active users.

By now you have realized that this article is not about sports betting, but that doesn't mean it isn't relevant to gambling. In a recent poll taken by 40 equity research analysts, 73% recommended a hold or sell of Twitter stock. We can assume that for the short term this means that Twitter's share price will remain stagnant, with a slight uptick due to management turnover. However, I see this as a once in a decade opportunity to own the shares of a company that is in the pockets of 22% of U.S. adults.

The catalyst of Twitters revival will be a restructuring that is designed and executed by Elliot Management, who's current holdings include significant stakes in Marathon, Tesla, eBay, AT&T (who recently merged for the large sum of $43bn), and many more. Their firm is full of financial and operational assassins that are chomping at the bit to cut costs and generate revenue for the tech giant and now that Dorsey is out they have their opportunity to do so.

I don't make a habit of recommending the purchase of individual securities because I believe that it exposes your investment's to risk that can otherwise be mitigated by proper portfolio allocation. However, in this instance I believe that it is worth the risk to take the ride with the new and improved Twitter.

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