The Top 4 Contrarian Reads: Berkshire Hathaway Inc. (BRK.B), Apple Inc. (AAPL)

How much are 400 million a tweets a day worth?
Dennis Berman of The Wall Street Journal asks: “Is Twitter Really Worth $10 Billion?” (registration may be required). The answer he found surprised him:

The math in the example above suggests $3.5 billion a year of revenue [by 2016], about where Google was in 2004. And the magic hasn’t kicked in yet. That magic is the value of free labor. The company doesn’t have to pay a cent for the 400 million messages sent each day. As with Facebook, the users willingly, voraciously, do the work gratis. … Companies love touting themselves as “platforms,” but in Twitter’s case it happens to be true. The company must spend to maintain its plumbing and constantly improve its interface, but once that’s done, it stands back and collects its middleman money.

That means getting to massive scale at relatively minimal cost. … For simplicity’s sake, let’s reduce Twitter’s net margins to Google’s, which are a gusher-like 21%. Value all those earnings at Google’s 17-times-trading multiple, and, voila, Twitter has a value of $12.5 billion. And you needn’t tweak conditions much to get a higher number.

No longer the Apple Inc. (NASDAQ:AAPL) of my eye
Shares of Apple Inc. (NASDAQ:AAPL) hit a new low on Monday, losing 2.5% even as the broad market gained 0.5% and putting the market capitalization below $400 billion. The market’s darling through much of last year, Apple Inc. (NASDAQ:AAPL) just can’t seem to catch a break now. Mark Hulbert examines why bad news keeps on coming — and what that means for investors:

With Apple’s stock 36% lower today than its September high, some investors might argue that the current consensus forecast is a case of closing the barn door after the horses have left. Unfortunately, the news is likely to get even worse, according to Michael Clement, an accounting professor at the University of Texas at Austin who has extensively studied analyst behavior. That is because a downward revision is more likely to be followed by yet another downward revision than by an upward one.

Incidentally, when would a contrarian be more interested in Apple Inc. (NASDAQ:AAPL)? When everyone wants to own the shares, or when the stock can’t catch a bid?

Enjoy your week, contrarian Fools.

The article The Top 4 Contrarian Reads originally appeared on Fool.com and is written by Alex Dumortier.

Fool contributor Alex Dumortier, CFA has no position in any stocks mentioned; you can follow him on LinkedIn. The Motley Fool recommends Apple and Berkshire Hathaway. The Motley Fool owns shares of Apple and Berkshire Hathaway.

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