Despite No Profits, This Economist Thinks “Twitter Is An Emotional Event, Not a Fundamental event”

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According to Bloomberg; Twitter Inc. is poised to price its initial public offering at a valuation that makes it more expensive than Facebook Inc., a profitable rival with five times as many users.Twitter yesterday boosted its IPO price to $23 to $25 a share, which would give them a market capitalization of $13.6 billion. That values […]

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According to Bloomberg;

Twitter Inc. is poised to price its initial public offering at a valuation that makes it more expensive than Facebook Inc., a profitable rival with five times as many users.

Twitter yesterday boosted its IPO price to $23 to $25 a share, which would give them a market capitalization of $13.6 billion. That values the company at 11.8 times its estimated 2014 sales, higher than the 11.4 times price-to-sales ratio for Facebook. By the way, Twitter is already several times oversubscribed at $25 a share and is set for a final offering price above according to Bloomberg. But this is a quote I liked the most;

“A tech IPO like Twitter with no profit is an emotional event, not a fundamental event. You either believe or you don’t,” said Max Wolff, chief economist and strategist at ZT Wealth. “Above $26, I think this thing starts to look a little dicey.”

I think I like the term “emotional event”