Twitter Leaps Over a Low Bar

 | Jul 29, 2014 | 6:33 PM EDT
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So Twitter (TWTR) delivered. I was worried it wouldn't and thought the risk/reward just wasn't good enough. Turns out it was.

What I didn't count on is how this classic beat and raise would drive the stock so high. I figured there were 8 points if it got it right, not 12. I think that there's a ton of short-covering. I know from the Twitter feed that I am being widely reviled for being the person who said he didn't know what Twitter would do that it could be up 8 or down 8, and I thought it was OK to say I didn't know which it would be.

For the record, I think I will never do that again, because in the new world of social media, you can't admit that you don't know what a stock will do and lay out scenarios positive and negative and how you would buy it if it got hit bad, which is what I suggested. In the new world of social media, all that matters is that you nail it perfectly, and when you don't, you are a fool. The simple fact is that Twitter would have been crushed if it missed again and would rally big if it didn't. The rally was bigger than I thought it would be.

How did Twitter do it? By having set such a low bar set by the last quarter's results. This quarter seems like the inflection point that we got when Facebook (FB) realized it had to nail mobile.

It's been a bruising couple of days where the Action Alerts PLUS charitable trust got lots of stuff wrong and some stuff right. But I have learned a valuable lesson. Don't bother saying you don't know. It counts as being wrong, especially if you bother to lay out the downside case with any precision. 

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