Twitter, Inc. (NYSE:TWTR) Advertising revenue takes a hit
After the market closed on Monday, social network Twitter (NYSE:TWTR) joined a growing chorus of companies that have either reduced or withdrawn their guidance for the current quarter, citing the impact of COVID-19, or the coronavirus. Twitter withdrew its outlook for certain financial metrics for the first quarter of 2020. Management also provided an update on user growth.
Investors, of course, had already priced in some negative impact from the coronavirus outbreak on the tech company. As of Monday evening, Twitter stock had slid about 38% since Feb. 19 — worse than the S&P 500‘s 34% decline during this timeframe.
Advertising revenue takes a hit
In its March 23 update, Twitter said it is withdrawing previously stated guidance for revenue, operating income, operating expenses, and capital expenditures, citing “the growing impact of COVID-19 on the global operating and economic environment and their effect on advertiser demand.”
“Twitter had a strong start to the year before the effects of COVID-19 began spreading more broadly, including a successful Super Bowl and overall strength in the U.S.,” explained Twitter CFO Ned Segal in the company’s press release about its updated outlook. “The COVID-19 impact began in Asia, and as it unfolded into a global pandemic, it has impacted Twitter’s advertising revenue globally more significantly in the last few weeks.”
Management noted that the impact of the pandemic is difficult to estimate but said that “current visibility” suggests its first-quarter revenue will be “down slightly on a year-over-year basis.” In addition, the company said it expects a GAAP operating loss for the period.
Previously, management had guided for total revenue to be between $825 million and $885 million, implying 5% to 12% revenue growth. Furthermore, Twitter had anticipated operating income during the period to be between $0 and $30 million.
A silver lining
But COVID-19 has also notably had an important positive impact on Twitter. The company is seeing accelerated growth in monetizable daily active users (mDAU), likely because of a combination of more internet usage as more people are staying at home and the usefulness of Twitter’s social platform for discovering and discussing timely news. Quarter-to-date, Twitter’s mDAU are about 164 million, up 23% year over year and 8% sequentially.
Even though the quarter hasn’t ended yet, this year-over-year growth rate is already an acceleration from 21% growth in the fourth quarter of 2019. In fact, it marks the fifth quarter in a row of accelerating mDAU growth.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 31.59.
The projected upper bound is: 30.69.
The projected lower bound is: 20.73.
The projected closing price is: 25.71.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 70.1016. This is not an overbought or oversold reading. The last signal was a buy 3 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 40.07. 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 3 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 2 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 20 period(s) ago.
Rex Takasugi – TD Profile
TWITTER INC closed up 1.160 at 25.850. Volume was 28% above average (neutral) and Bollinger Bands were 219% wider than normal.
Open High Low Close Volume___
25.600 26.460 24.140 25.850 5,129,221
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 25.65 33.02 35.69
Volatility: 186 105 68
Volume: 5,747,878 4,827,916 3,380,118
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.
TWITTER INC is currently 27.6% 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 moderate flows of volume out of TWTR.N (mildly bearish). Our trend forecasting oscillators are currently bearish on TWTR.N and have had this outlook for the last 17 periods.