Twitter, Inc. (NYSE:TWTR) Social Media Growth That Isn’t Fake News
The brutal Q4 market correction is making many growth stocks investable again and one of them is Twitter ( TWTR ).
Actually, Twitter saw a strong rally off of its October lows after reporting a 50% EPS surprise for Q3, but has slid back over 25% in the six trading sessions up to December 24.
The good news is that the stock held above those October lows just above $26 and should be on growth investor “buy lists” as the market stabilizes.
My colleague Tracey Ryniec chose Twitter for a Bull of the Day feature in November and some of her post-earnings notes are worth reviewing…
Twitter is winning over Wall Street quarter by quarter. This Zacks Rank #1 (Strong Buy) is expected to grow both revenue and earnings by the double digits in both 2018 and 2019.
Twitter operates a social media platform in 40 languages around the world that provides users with updates on what is happening, including breaking news, globally.
Big Earnings Beat in Q3
On Oct 25, Twitter reported its third quarter results and beat the Zacks Consensus Estimate by 7 cents. Earnings were $0.21 versus the consensus of $0.14. That’s a beat of 50%.
Revenue rose 29% to $758 million, up from $590 million.
Of that total revenue, most came from advertising revenue which rose 29% to $650 million. Half of the advertising revenue is now coming from the video ad format.
Wall Street is always watching the Daily Active Users count, which fell to 326 million from 335 million in the second quarter but that was mostly the result of the company’s policy of purging fake, spam and abusive accounts.
(end of excerpt from Tracey’s Nov 14 report)
Social Media Growth That Isn’t Fake News
The metrics that jump out to me here, besides the big bottom line beat, are year-over-year revenue growth of 29% — on pace to break $3 billion this year — in an environment where social media is under big clouds of political controversy.
If the Twitter platform is having to “self-police” to remove harmful users and accounts, and these kinds of numbers are the damage, large growth investors appear good with that.
While the Zacks Consensus profit estimate for 2018 was bumped up to $0.80 from $0.71 primarily due to the big EPS beat, a majority of analysts joined in moving 2019 EPS up 13% from $0.78 to $0.88.
That’s earnings growth of just 10.5% over 2018, a phenomenal year when the company really opened the profit valves with over 80% bottom line growth.
But with revenues expected to advance nearly 15% to $3.43 billion next year, the funnel at the top is still offering plenty of opportunities for monetization.
To follow and stay in sync with the growth at Twitter, all you need to do is keep your eyes on the accelerations and decelerations in EPS estimates. And one of the handiest ways to do that is with the Zacks Price & Consensus chart.
What you see below: on the left-hand scale are lines plotting the changes in annual earnings estimates against the stock price on the right-hand scale. The size of the green arrows indicates the magnitude of the earnings beat…
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
The projected upper bound is: 32.51.
The projected lower bound is: 24.84.
The projected closing price is: 28.67.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.
A morning star occurred (this is a three-candle pattern). This is a bullish pattern that often signifies a major bottom.
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 11.1198. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 17 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 39.35. This is not a topping or bottoming area. However, the RSI just crossed above 30 from a bottoming formation. This is a bullish sign. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 0 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 -119.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 6 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 4 period(s) ago.
Rex Takasugi – TD Profile
TWITTER INC closed up 2.210 at 28.660. Volume was 44% above average (neutral) and Bollinger Bands were 60% wider than normal.
Open High Low Close Volume___
27.000 28.700 26.800 28.660 6,681,920
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 31.98 32.16 33.93
Volatility: 106 79 72
Volume: 5,672,913 4,894,084 5,304,441
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 15.5% 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 4 periods.
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