I like reading Howard Lindzon, a hedge fund/venture capital guy who became a widely-followed trend pundit and co-founded StockTwits, and he now has a newsletter in partnership with Agora… so Gumshoe readers were curious about what he’s selling, and, frankly, so was I. Let’s dig in, shall we?
Lindzon is a prolific opiner, so you can easily follow his stuff on Twitter or his blog, which is worthwhile — like anyone who has developed a following, he has and voices strong opinions that I’m sure you won’t always agree with, but I find him interesting (in the Twitterverse, as in the world of investment newsletter teaser ads, being wishy-washy or undecided doesn’t get you much attention).
He launched his paid newsletter, called Peloton (in what so far seems to be his own private imprint as an “Agora affiliate,” Charles Street Research), late last Summer and claims huge average gains from the recommendations he has made in Peloton. Like many “entry level” newsletters, it seems to be mostly focused on a monthly writeup of a single appealing investment idea, though I don’t know what most of those recommendations would have been (he says that “all seven of my trade recommendations are up with an average open gain of 259%!”).
So that’s the backdrop — we’ve got a new lower-cost newsletter being pithed by Howard Lindzon… and like so many newsletter ads, it’s baited with a teased investment idea that he says “could easily double in just a few days or weeks” following their upcoming announcement.
And that means we’ve got an answer to find for you — you can go ahead and subscribe to Lindzon’s Peloton if you want to, I have no idea whether it’s up your alley or not, but don’t ever turn over your credit card just to learn about a “secret” stock… that’s likely to mess up your ability to think clearly about that stock (among other biases that will hit). Let’s ID the ticker first for you, then you can go make your decisions.
So what is it? Lindzon teases that…
“This company’s patented technology could single-handedly disrupt the $800 billion (and growing) cryptocurrency markets and help early investors turn every $1,000 into $10,000.”
“I’ve just discovered a NEW way to score massive crypto-like profits WITHOUT having to risk a single cent on Bitcoin, Litecoin, Ethereum, Dogecoin, Ripple, or any other cryptocurrency you’ve been hearing about in the news.
“I call it the ‘Crypto Terminal’….
“… the very existence of this “Crypto Terminal” could not only disrupt the way investors get information about cryptocurrencies…
“It could completely disrupt the stranglehold old-school media outlets––like Reuters, CNBC, and even Bloomberg––have on the financial news… and become the biggest player in a $3.5 billion dollar market in the process!
“And, on April 25, a shocking announcement could send shares of this tech company skyrocketing!”
He goes on to describe how the chat feature of the Bloomberg Terminal is the most-used part of that closed platform, connecting hundreds of thousands of the biggest traders in the world in real time… and that Bloomberg doesn’t track most of the cryptocurrencies… so this “secret” stock…
“… opened up a ‘back door’ for folks all around the world who want access to real-time information about the only market that’s traded 24 hours a day, seven days a week, 365 days a year.
“And in the coming months… not only could this tech company become the Bloomberg Terminal for the cryptocurrency markets…
“It could turn every $1,000 invested into a whopping $10,000!”
So what is it? Well, after feeding those clues and a few others in the ad into the gaping maw of the Mighty, Mighty Thinkolator, we can confirm that here Lindzon is touting… Twitter (TWTR).
No surprise there, I suppose, Twitter is the engine behind Stocktwits, where Lindzon is still Chairman, and he has made that “Bloomberg” comparison in past years as well.
And Twitter has had an absolutely spectacular few months — after being effectively left on the side of the road in early 2016, forgotten and ignored as revenue stopped accelerating (and largely stayed stagnant, actually, as user growth stalled), the stock did start to come to life toward the end of 2017 and has surged 50% in just the past six weeks.
That’s not enough to get them back tot he glory days of 2014, when the stock briefly peaked near $70, but I’m sure it does a lot to encourage longtime Twitter users that yes, they may finally be figuring out how to grow beyond their core audience and, importantly, turn that audience into money.
The $3.4 billion opportunity is not particularly remarkable — certainly the advertising world is much bigger than that, and even after not growing much over the past several years Twitter’s annual revenue is just over $2.4 billion (Facebook’s is $40 billion, just for comparison’s sake).
And yes, lots of people talk about cryptocurrencies on Twitter… and the attendant surge in cryptocurrency ad spending at the end of last year and the beginning of this year probably had a meaningful impact on Twitter’s earnings and might even be worth a comment in the conference call, though bitcoin and blockchain did not garner a mention in the last Twitter shareholder letter. There’s also some reporting about Twitter being a vehicle for cryptocurrency scams, though I don’t know if that’s fair — every scam artist in the financial world has spent the past six months trying to ride that wave of speculative bitcoin ebullience, their tentacles are likely in every publishing or communication platform.
And Twitter does indeed have big news coming in late April, though YCharts expects it to be April 26, not the 25th — that’s the likely date for their first quarter earnings report. Twitter is still a tiny little thing compared to Facebook, with a market cap of “only” $26 billion, so there is plenty of room for huge moves if they seem to be doing very well or very poorly, and though they did just go “adjusted EBITDA positive” in the past quarter it’s not really earnings per share that investors are likely to be paying attention to — they’ll probably be much more focused on the growth in ad revenue and the growth in users and traffic as they try to begin dreaming about huge future growth.
I missed this recent recovery in Twitter, it got stuck in my head as the “boy, that’s a shame that they can’t figure out how to make money from this great business” stock for quite a while and I haven’t been watching it (though I do browse some of my favorite folks on Twitter most days), but it certainly goes without saying that having a huge communications platform is a great business if you can make it grow… and, yes, perhaps Twitter is as close as we’re going to get to a “Crypto Bloomberg”.
In the world of Wall Street prognosticating, Twitter is penciled in with 59 cents in adjusted EPS for 2018, rising to 67 cents in 2019 — with revenue growth anticipated to be roughly 10% both this year and next. So that’s not an absurd proposition if you think Twitter is valuable and has a long future as a great platform company… but it is expensive for a company that’s growing so much more slowly than Facebook despite its dramatically smaller size. Maybe that’s the idea behind Lindzon’s pick here, that they could have room to grow a lot faster than this… or, perhaps, just that their growth will accelerate because of the cryptocurrency chatter increasing interest in (and spending on) the Twitterverse (could someone have spent even more on advertising than James Altucher’s cryptocurrency newsletter publishers over the past few months?). I don’t know… but compared to Facebook, at least, Twitter is still beaten-down and enjoys pretty low growth expectations.
But you, at least, can now think it over. Let us know if you’re all a-twitter over Twitter with a comment below. And if you’ve tried out Lindzon’s Peloton during it’s first half-year or so of existence so far, please click here to share your thoughts with your fellow investors.
Disclosure: I own shares of Facebook. I do not own any shares of any other stock mentioned above, and wont’ trade in any covered investment for at least three days, per Stock Gumshoe’s trading rules. And I’m also a fan of bike racing, but when I get in the saddle I usually end up looking at the Peloton from behind.