Twitter, Inc. (NYSE:TWTR) fundamentals support the bull thesis below $30
Shares of digital advertising company Twitter (NYSE:TWTR) have been on a roller coaster ride over the past several years. First, Twitter stock started off Wall Street life with a big IPO that didn’t quite deliver on supercharged expectations.
Then, things took a turn for the worse, as user growth slowed, revenue growth dropped into negative territory, losses continued to pile up, and Twitter stock quickly became the ugly duckling in an otherwise very strong digital advertising industry.
Those struggles were just a phase. Over the past few quarters, while user growth trends have remained weak, revenue growth trends have dramatically improved thanks largely to video ad integration. Improved revenue growth trends drove Twitter into consistently profitable territory, and Twitter stock took off to new highs.
The fundamentals underlying Twitter stock are solid, but nothing too exciting.
User growth is a big headwind. This platform seemingly hasn’t grown its user base for the past several years. Now, due to huge fake account purges, the monthly active user base is in decline. Long term, 300 million monthly actives seems like a reasonable carrying capacity for the platform.
That is still 300 million users, which is a lot. And, those 300 million users are more engaged than ever with daily usage consistently growing around 10% year-over-year. With usage up and more videos being shared, Twitter is having an easier time monetizing its 300 million users. Net result? Revenue growth trends are dramatically improving, even with stalled out user growth.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 32.84.
The projected upper bound is: 35.04.
The projected lower bound is: 28.98.
The projected closing price is: 32.01.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 white candles.
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 54.7382. This is not an overbought or oversold reading. The last signal was a sell 11 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 48.51. 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 44 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 -108.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 11 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 5 period(s) ago.
Rex Takasugi – TD Profile
TWITTER INC closed down -1.690 at 31.980. Volume was 34% below average (neutral) and Bollinger Bands were 14% narrower than normal.
Open High Low Close Volume___
33.560 33.590 31.850 31.980 3,051,489
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 33.39 30.54 33.97
Volatility: 53 64 70
Volume: 3,388,745 4,705,211 5,458,981
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 5.8% below its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of TWTR.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on TWTR.N and have had this outlook for the last 20 periods.