Sunday, October 06, 2013

Twitter IPO vs. Intel

Hmmm... which is more likely to be a better investment over a one-year holding period, buying Twitter (TWTR) on opening day at the open at market price or the same amount invested in Intel (INTC).
 
Intel is in the dumps because people fantasize that the PC is dead and that Intel has no future in mobile (and ignoring servers), or so they say. Meanwhile, Intel is paying a 3.9% dividend with a P/E of 12.32.
 
Could Intel double or rise at least 30% over a year?
 
Will Twitter be overvalued and overpriced in a year at 30% over its market price at the open on its opening day of the IPO?
 
And what will the premium be for buying TWTR at the open at market on its IPO opening day? 10%? 20%? 50%? 100%? 120%? One theory is that after the Facebook fiasco, the opening frenzy will be much more subdued, but... who knows.
 
BTW, my main and unshakeable theory is that no retail investor like me will have a ghost of a chance of actually scoring IPO shares.
 
Sure, there are plenty of other strategies for buying other than at the open at the market, like waiting an hour or waiting until the afternoon or waiting a few days. Or, doing like I did with Facebook, waiting until it fell under $20. But I am disinclined to bet on lightning striking twice in the same place.
 
And if you don't like Intel, do the same exercise with any other tech value/comeback stock.
 
Or even Yahoo (YHOO), which has a P/O ratio of 9.61. I mean, a year ago you could have gotten Yahoo for $16 and it's now at $34. Could it rise more in a year than Twitter from its opening price? Who's to say. I mean, longer term I see Twitter as a better growth play than any of these other plays, but... in the short or medium term, who can say.
 
Go ahead and try to figure out the answers to any of these questions.

-- Jack Krupansky

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