[mbesto]

Before we jump the gun on this "loss", read this first:[1]

  Net loss - GAAP net loss was $511 million for the fourth quarter of 2013 compared to a net loss of $9 million in the same period last year. The company's Q4 GAAP net loss included $521 million of stock-based compensation expense, of which $406 million was for restricted stock units previously granted to employees, for which no expense had been recognized, until the effective date of our initial public offering in accordance with GAAP.

  Adjusted EBITDA - Adjusted EBITDA was $45 million for the fourth quarter of 2013 compared to $18 million in the same period last year.

  Non-GAAP net income / loss - Non-GAAP net income was $10 million for the fourth quarter of 2013 compared to a Non-GAAP net loss of $0.3 million in the same period last year.

Oddly enough the "The company's Q4 GAAP net loss included $521 million of stock-based compensation expense, of which $406 million was for restricted stock units previously granted to employees, for which no expense had been recognized, until the effective date of our initial public offering in accordance with GAAP." seems be tucked away in "Research and Development" part of the P&L.

It's worth noting they have $2.2b in cash:

> Cash, cash equivalents and marketable securities - As of December 31, 2013, cash, cash equivalents and marketable securities were approximately $2.2 billion, compared to $321 million as of September 30, 2013.

TL;DR - This $645m "loss" isn't what you think it is.

[1]https://investor.twitterinc.com/releasedetail.cfm?ReleaseID=...

[downandout]

Stock based compensation still costs investors money. They are effectively using investors' money to pay their employees, and that should and always will be priced into the stock.

With its 18% decline in after hours trading today, Twitter's market cap is still $36.63 billion. Even if you analyze it based on the shell-game of adjusted EBITDA, and assume that it will stay at $45 million/quarter, you come out with a P/E ratio of 165.

Twitter is not Facebook. Their growth trajectory isn't remotely close. Personally, I am staying away. I don't want to party like it's 1999.

[yapcguy]

> Stock based compensation still costs investors money.

Hi, could you expand upon this, perhaps with an example? Thanks.

[jussij]

When the company floats they release a given amount of stock to the market.

If they then also release stock to pay their employees then the total stock in the market goes up.

If the total number of stock (i.e. shares) goes up but the company profits go and the money in the bank (and other assets) also goes down then the value of each of those individual stock items will also be going down.

Hence the drop in the share price.

[chrisgd]

I don't follow your math.

[downandout]

Actually I was wrong...to the low side. When I calculated it I used a lower market cap than I should have. Adjusted EBITDA was $45 million for the quarter. $45*4 quarters=$180M. $36.63B/$180M=203.5. So they are trading at 203.5 times adjusted EBITDA

[klochner]

Too bad Twitter can't issue RSUs to pay for server costs as well, they could take their expenses down to zero.

[toomuchtodo]

Depending on who the hosting provider was, they could :)