CEO Jack Dorsey has divided his focus between Twitter and Square, and Twitter, Inc. (NYSE:TWTR) stock is hurting

CEO Jack Dorsey has divided his focus between Twitter and Square, and Twitter, Inc. (NYSE:TWTR) stock is hurting

CEO Jack Dorsey has divided his focus between Twitter and Square, and Twitter, Inc. (NYSE:TWTR) stock is hurting

Left-leaning Twitter (NYSE:TWTR) users were in an uproar over the weekend after a “Republican activist” said he bought a big stake and aimed to oust CEO Jack Dorsey.

Despite breathless stories in liberal outlets, this is not a political narrative.

Paul Singer’s Elliott Management hedge fund has taken a stake estimated to be worth $1 billion, in a company with a market capitalization of $28 billion. In conventional terms, this should not be enough to move the needle. But there are reasons why the strike might work, and they have nothing to do with politics.

Twitter Is Just Twitter

While Twitter has embedded itself in the national consciousness, even the global consciousness, the shares now sell for less than they did five years ago, even after a March 2 spike of 8%.

Twitter went public in 2013, at $26 per share, a market cap of $24 billion. But it quickly rose to almost $42 per share. If you bought Twitter in the public market on the day of its IPO, you’re under water now.

Dorsey’s big accomplishment, after re-joining the company he co-founded in 2015, was to gradually match expenses to revenue. Twitter lost over $450 million in 2016, but net income for 2019 was $1.5 billion, on revenue of almost $3.5 billion.

The problem was that, beyond trying to patch holes in the algorithm, sell ads against Tweets and deal with things like bots and trolls, Twitter didn’t change much. Tweets got longer, users learned to thread them and produce stories, but Twitter remained a single, unitary service.

Twitter has become a global brand, but it’s still a single product.

Where’s Jack?

Then there’s CEO Dorsey, who seems to think he’s got a part-time gig.

The man’s got talent. As CEO of Square (NYSE:SQ), Dorsey has been a raging success. Square is up over 500% since going public at the end of 2015. Revenues grew 42% in 2019.

Square started with a single dongle that let micro-merchants take credit cards. It has since become a financial services company. It pitches itself as “the one-stop run your business shop.” It offers payroll services, invoicing, loans and the kind of real-time analytics only big merchants had before. The stock is trading at $77 per share, a market cap of $35 billion.

No one is asking Jack Dorsey to leave Square.

But when Dorsey said last year he would spend half of this year in Africa, there were at least obvious benefits to Square. The continent has dozens of currencies and borders. Dorsey’s plans for a continent-wide stable coin, tied to the dollar, could take off there. Square could also take off there.

But what’s the benefit to Twitter?

The Bottom Line on TWTR Stock

Dorsey has allies, like Tesla (NASDAQ:TSLA) CEO Elon Musk, who recently tweeted his support. The question is whether those friends are willing to put their money where their tweets are.

Singer has put Twitter in play. It might make a tasty morsel for any of the major cloud companies, which are worth as much as 40 times more than its $28 billion. Even a Comcast (NASDAQ:CMCSA) or AT&T (NYSE:T) might find Twitter affordable.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 38.17.

The projected lower bound is: 31.82.

The projected closing price is: 34.99.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 60.1533. This is not an overbought or oversold reading. The last signal was a buy 1 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 48.94. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 16 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -44. This is not a topping or bottoming area. The last signal was a buy 1 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 5 period(s) ago.

Rex Takasugi – TD Profile

TWITTER INC closed down -0.890 at 34.930. Volume was 36% above average (neutral) and Bollinger Bands were 14% wider than normal.

Open     High      Low     Close     Volume___
35.970 36.480 34.410 34.930 5,290,282
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 35.88 34.17 36.32
Volatility: 71 57 53
Volume: 5,543,238 4,096,139 3,173,083

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

TWITTER INC is currently 3.8% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of TWTR.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on TWTR.N and have had this outlook for the last 2 periods.

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