It was the most anticipated IPO since Facebook. And, at first glance, Twitter appears to be suffering the same result as Facebook. According to one expert, it's about to get worse.
Eric Jackson, founder of Ironfire Capital, says Twitter's relative valuation is right now too high, even using a metric that was a favorite in the dot-com bubble at the turn of the millennium – the price-to-sales ratio.
Investors and analysts use compare the price of shares to the revenue per share when there's not enough earnings history for a company or when forecasts are difficult to determine. While this measure is less volatile than the more popular price-to-earnings ratio, its biggest drawback is that it doesn't give a sense of a company's costs relative to others.
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