Here's Why Twitter Is 'Pretty Much Toast'

Trip Chowdhry of Global Equities Research blasted Twitter Inc (NYSE: TWTR) in a report and suggested it isn't even worth $10 per share.

Chowdhry said in a report on December 18 that he was once positive on a potential Twitter acquisition by salesforce.com, inc. (NYSE: CRM) as it would give Salesforce a large enough data set, which would be needed to train its Machine Learning Models.

Chowdhry noted the rationale behind the acquisition is similar to Microsoft Corporation (NASDAQ: MSFT)'s acquisition of LinkedIn and what Microsoft will do with social media's data sets.

Donald Trump And Twitter

Chowdhry said that President-elect Donald Trump's election win proves the "data quality in Twitter is horrible."

Chowdhry noted that he attended an artificial intelligence conference and asked data scientists what wrong as all the polling data and social media analytics supported a clear Hillary Clinton win. An answer he received was that there are too many fake IDs on Twitter's platform and some users could have more than 100 accounts, which skews the data.

In fact, if Twitter cracks down on fake IDs, its active user base could fall by 40 percent, although this problem isn't unique to Twitter as Facebook Inc (NASDAQ: FB) is also plagued with tons of fake IDs.

"If data quality is bad, Ad targeting is bad, and if Ad targeting is bad, Advertisers are not happy, and hence monetization will remain challenging for TWTR," Chowdhry argued. "If data quality is bad, then performing prediction on these data sets will also be wrong, hence 10% of revenues that TWTR gets from selling its data will also suffer."

Smart Money Not So Smart

Chowdhry followed up on Wednesday in a new report and reiterated his view that Twitter is not even worth $10 per share, or "pretty much toast."

After Tuesday's close, Twitter's CTO and VP of Product announced they were leaving the company.

Chowdhry added that many investors have been "foolishly building investment thesis based on complete stupidity." For instance, Saudi Arabia's Prince Alwaleed is a notable shareholder.

"Do you think Prince Alwaleed knows the difference between a computer chip and potato chip?," the analyst rhetorically asked.