Twitter Inc (TWTR), Netflix, Inc. (NFLX) and Facebook Inc (FB): Prem Watsa Hates These Stocks

A closer look of Fairfax Financial Holdings’ letter to its shareholders uncovers an interesting fact that the three tech-based companies, namely, Twitter Inc (NYSE:TWTR), Netflix, Inc. (NASDAQ:NFLX) and Facebook Inc (NASDAQ:FB), which are usually in the lists of many investors, aren’t the choice of Fairfax’s Chairman and the CEO, Prem Watsa.

Prem Watsa

While briefing the events associated with the company’s investment decision and follow-on action with respect to BlackBerry Ltd (NASDAQ:BBRY), Watsa highlighted that how the leading tech companies like Twitter Inc (NYSE:TWTR), Netflix, Inc. (NASDAQ:NFLX) and Facebook Inc (NASDAQ:FB) are overvalued and could soon turn up into another tech collapse like that of 1999-2000 era. For explaining his case, Watsa mentioned that  Twitter Inc (NYSE:TWTR) listed on the stock exchange right after BlackBerry Ltd (NASDAQ:BBRY) declared its convertible debt issue.

Mr.Watsa added that Twitter Inc (NYSE:TWTR) debuted at a price of $26 per share, which implied a market value of $18 billion. Watsa recalled that even as Twitter’s revenue was close to $665 million and losses as much as $645 million, most of the investors faced difficulty buying the stock unless they belonged to those brokerage companies, which acted as underwriters. Watsa compared that at the time of Twitter’s listing, BlackBerry Ltd (NASDAQ:BBRY)’s market cap was $3 billion, with $8 billion in revenues and $2.6 billion in cash with no debt outstanding except the convertible debt. This means that at $26 per share, Twitter Inc (NYSE:TWTR) was overvalued, but then it is trading near a $55 mark now with $39 billion market cap.

Watsa also compiled a table showing the ballooned market valuation of some of the tech companies. The table lists Netflix, Inc. (NASDAQ:NFLX) with a P/E ratio of 118 and $27 billion market cap, while its Price to Sales ratio is 6.0. Facebook, Inc (NASDAQ:FB) has a $174 billion market cap with P/E and Price to Sales ratio at 116 times and 21 times respectively. They are over speculated and could end worse than the previous tech bubble, concluded Watsa.

Disclosure: none

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!