After such a rapid IPO in November 2013, the social media giant Twitter (TWTR) is struggling to support a significant increase in share prices. Besides, the company may find it difficult to maintain strong profit and revenue growth during the stock market correction due to the pandemic.
Is the stock purchase currently underway?
Twitter is a social network that allows users to post and interact with their audience through messages known as "tweets". Twitter competes with companies like Facebook (FB) and Snap (SNAP). Twitter generates money from advertising sales for the business. The company tries to be a platform for live events, including sports, breaking news, and entertainment. Higher levels of traffic and engagement will increase the demand for Twitter advertising, increasing the price of advertising and increasing the company's sales. Many professional sports organizations have already suspended their regular seasons indefinitely, including the NBA and NHL, due to the coronavirus proliferation. Tweets during live sports, especially the NBA, are a key driver of Twitter traffic. Investors are also closely monitoring new indicators for Twitter, Monetizable Daily Active Users, and mDAUs to determine whether the platform is gaining popularity or losing it.
Over the last quarter, profit fell 19% to 25 cents per share, according to a February 6 report. Meanwhile, the company's revenue grew 11% year-on-year to $1.01bn, with 4Q results below analysts' forecasts. But the growth of income and number of Twitter users surpassed the estimates of Street, causing a spike of 16%. On March 9, Twitter reached an agreement with active investors who pressured the company to make changes. In particular, the company agreed to a $2bn share buyback program. According to analysts` Checkup, Twitter shares are rated at 70 of the highest possible 99 IBD Composite Rating. Investors can use the Composite Rating to easily assess the quality of the stock's fundamental and technical characteristics. Among other ratings, Twitter has 64 of the highest possible ratings of 99 EPS, 41 of the highest possible ratings of 99 Relative Strength Rating and C- Accumulation/Distribution Rating. The EPS Rating measures a company's fundamental strength by looking at quarterly and annual earnings growth. The EPS Rating measures stock price movements, while the Accumulation Rating measures institutional demand over the past 13 weeks, with the C- Rating being a neutral rating. Shares with "A" or "B" ratings are preferred for accumulation/distribution; this indicates that mutual funds, banks, hedge funds, insurers, pension funds, etc. have been net buyers of shares for the last three months. Among Twitter's competitors is Snapchat, which has collapsed by more than 40% due to the global situation, while Facebook shares have fallen by about 30%.
Against the backdrop of the stock market correction, Twitter shares are about 50% below the 52-week high after a sharp drop in recent weeks. Stocks are well below their 50 and 200-day lines.