Is Twitter, Inc. (NYSE:TWTR) a good investment?

Is Twitter, Inc. (NYSE:TWTR) a good investment?

Is Twitter, Inc. (NYSE:TWTR) a good investment?

Twitter (NYSE: TWTR) has been a bit of a conundrum for investors. It’s a major part of popular culture and has become a platform for everyone to express their opinions concisely, from the president of the United States to comedians, actors, and pretty much every famous person.

The social media site, however, has struggled to turn its audience into revenue. It arguably has a more important place in society than its income reflects, and it has struggled to compete with Facebook, which has dominated social media across the multiple platforms it owns.

Twitter might someday prove to be a strong investment, but that’s not the case yet for anyone who invested in its IPO. The company closed its first day of trading on Nov. 7, 2013, at $44.90 a share. In the years since then, it briefly traded above $70, but more recently, it has struggled, closing at $30.55 a share on Dec. 12, 2019.

You’re in the red

While Twitter did exceed its IPO price earlier in 2019, it has dipped in the latter part of the year. If you bought shares at the Day One close — $44.90 — $5,000 would have bought you 111.35 shares. Those same shares would be worth $3,402 as of Dec. 12.

That’s a very disappointing return for a company that seems to have managed to become a cornerstone of social media. In many ways, the company’s lagging stock price does not appear to reflect its results.

Twitter grew its monetizable daily active users (MDAU) to 145 million in the third quarter. That’s a 17% increase, the company’s biggest user growth in two years. Revenue also increased in Q3, jumping 9% to $824 million.

The stock price might be struggling because while Twitter is growing, it does not always have a positive reputation. That’s partly due to the political divide in the U.S. and partly due to how the company polices the content on its platform. That’s something Twitter addressed in its Q3 letter to shareholders:

We continued to make progress on health. In Q3 we gave people more control over their conversations on Twitter with the launch of author-moderated replies in the U.S., Canada, and Japan, and we improved our ability to proactively identify and remove abusive content, with more than 50% of the Tweets removed for abusive content in Q3 taken down without a bystander or first-person report.

That’s a start, but the company faces a major challenge in protecting free speech and offering a place users feel good about visiting. Twitter is divisive, and that’s not an easy sell to advertisers.

Is Twitter a good investment?

Twitter has managed to become a social media stalwart. That’s impressive given the number of companies like MySpace, Friendster, and many others that had a moment and then flamed out.

Establishing a long-term user base that continues to grow gives the company a foundation to build on. That’s a start, but Twitter has a lot of work to do when it comes to consumer perception, which impacts its ability to monetize. Advertisers don’t want to spend money on a brand people use but don’t always feel good about. Changing that is a massive uphill battle for the company — one that’s made harder by President Donald Trump’s polarizing use of the platform.

What makes Twitter popular — its mostly no-holds-barred content — is also what turns off advertisers. That’s a major challenge when it comes to growing revenue that the company has not proven able to solve.

Technical Indicators

Overall, the bias in prices is: Downwards.

The projected upper bound is: 35.16.

The projected lower bound is: 27.88.

The projected closing price is: 31.52.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black 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 77.3192. This is not an overbought or oversold reading. The last signal was a sell 12 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 57.93. 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 buy 18 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 192.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 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 buy 26 period(s) ago.

Rex Takasugi – TD Profile

TWITTER INC closed up 0.980 at 31.680. Volume was 27% above average (neutral) and Bollinger Bands were 66% narrower than normal.

Open     High      Low     Close     Volume___
30.710 31.900 30.640 31.680 3,725,911
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 30.49 32.12 36.57
Volatility: 27 67 52
Volume: 2,927,691 3,287,100 2,961,988

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 13.4% below its 200-period moving average and is in an upward 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 moderate flows of volume into TWTR.N (mildly bullish). Our trend forecasting oscillators are currently bullish on TWTR.N and have had this outlook for the last 12 periods.

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