Twitter Inc (TWTR)

[ulfahl]

$TWTR pps still cheap and here is why:

On April 14, 2014, the CEO of Twitter, Dick Costolo, and the co-founders Jack Dorsey and Evan Williams all said they "have no current plans to sell any of their shares."

A New York Times article suggests that at least two major venture capital firms that have large stakes are also planning to hold onto these shares. The article also states JPMorgan Asset Management is planning to hold a roughly 8.5% stake in Twitter. The article states:

Twitter's largest shareholder - the money management firm Rizvi Traverse Management, which oversees funds that own 17.9 percent of the company - also plans to hold onto the stock, according to a person familiar with the firm's thinking, who spoke on condition of anonymity because Rizvi does not publicly discuss its investments.

Benchmark Capital, a venture capital firm that was one of the early investors in Twitter, intends to retain its 5.4 percent stake, according to the Twitter filing. Peter Fenton, a Benchmark partner, is a director of Twitter.

"We're just as excited to be investors in Twitter now as we were when it was 25 employees," said Matt Cohler, another Benchmark partner. "We always thought of Twitter as a long-term investment."

Twitter's third-largest shareholder - JPMorgan Asset Management, a money management unit of JPMorgan Chase - also intends to hold onto its 8.4 percent stake in the company, said a spokesman, Darin Oduyoye.

Shorts have been piling into Twitter on the hopes of the IPO lockup expiration (potentially causing a big wave of selling pressure), but it appears that this trade is over. Shorts waiting for additional losses on May 5 could see the stock surge when this "spooky" and much anticipated date comes and goes without a big sell-off. According to Shortsqueeze.com, almost 46 million Twitter shares are currently short. This represents nearly 12% of the entire float. This is also up from about 42 million shares short (or a nearly 10% increase) from the data in the prior month. That means this trade could be crowded and that shorts might be disappointed when May 5 rolls around. This is another reason why I expect this stock to rise in May.