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Why Twitter, Inc. (NYSE:TWTR) Stock Repurchase Program Isn’t Clear Yet

Why Twitter, Inc. (NYSE:TWTR) Stock Repurchase Program Isn’t Clear Yet

Twitter TWTR, +5.70% has averted a major showdown with hedge fund Elliott Management. The fund wanted to oust Twitter’s CEO and push for other changes. As part of the deal with Elliott Management, Twitter will give some cash to its shareholders through stock repurchases. Twitter’s stock repurchase program will put $2.0 billion back in shareholders’ pockets.

Twitter will fund the repurchase program with a $1.0 billion investment from Silver Lake and cash on hand. The company made a profit of $1.5 billion in 2019 and wrapped up the year with $6.6 billion in cash.

Twitter’s stock repurchase program sees it join Facebook, Alphabet, and eBay, which have also lined up lucrative repurchase plans. Recently, Facebook added $10 billion to its repurchase program, which put it on course to return $34 billion to shareholders.

Twitter’s stock repurchase plan raises questions

Although Twitter has discussed how it will raise funds for its repurchase program, we don’t have any details about when the company will launch the program. Also, we don’t know when Twitter’s stock repurchase plan will end. The company only said that it will repurchase shares over time.

Twitter stock fell about 3.0% on Monday and ended the session at $32.46. At that price, the company could repurchase up to 8.0% of its outstanding shares.

Commitment to delivering growth across users

Twitter’s stock repurchase program is the result of a fairly quick settlement with Elliott Management. The fund accumulated a stake of $1.0 billion or about 4.0% of Twitter stock. Elliott Management built the big stake to push Twitter to make changes that it believed would benefit shareholders.

Elliott Management wanted to oust Jack Dorsey as Twitter’s CEO. Currently, Dorsey splits his time between Twitter and Square SQ, +2.30%. Notably, the fund wanted a full-time CEO for Twitter.

The deal that Twitter struck with Elliott Management will leave Dorsey in his position. However, the company made a commitment to deliver user and revenue growth. Twitter also agreed to appoint Elliott Management and Silver Lake representatives to its board.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 37.76.

The projected lower bound is: 30.93.

The projected closing price is: 34.34.

Candlesticks

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 24 white candles and 26 black candles for a net of 2 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 41.1689. This is not an overbought or oversold reading. The last signal was a buy 6 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 47.97. 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 21 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 -50. This is not a topping or bottoming area. The last signal was a buy 0 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 10 period(s) ago.

Rex Takasugi – TD Profile

TWITTER INC closed up 1.850 at 34.310. Volume was 48% above average (neutral) and Bollinger Bands were 20% wider than normal.

Open     High      Low     Close     Volume___
33.780 34.780 33.140 34.310 5,569,103
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 34.28 34.36 36.24
Volatility: 78 62 54
Volume: 5,699,528 4,215,806 3,223,789

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 5.3% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 7 periods.

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