The Lesson To Learn From The Twitter Stock Crash (02/18/2016)

Bubble bulls used to say that stock market valuations do not matter while they chased fad stocks.

But the crash in Twitter, which has fallen into oblivion, is a lesson in why they do eventually matter.

A year ago the stock was over $70 a share.

Today it is trading at $18.51.

Consider this story from The Atlantic:

Yet only in the twisted logic of the startup economy could a company with around $500 million of revenue per quarter—and more, most recently—be called a failure. That’s half a billion dollars for a tiny application that simply lets people send out 140 characters to each other. The economic activity it has generated is nothing short of miraculous.

But that’s not enough for investors who expect to recoup 100 or even 1,000 times their original investment in the company.

Full story here.

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