Why the Worst May Not Be Over for Twitter Inc (TWTR)

Twitter Inc (TWTR) has been falling to new record lows in 2016

Jan 20, 2016 at 12:44 PM
facebook X logo linkedin

So far, 2016 has not been kind to the stock market, with major equity indexes marking their worst yearly starts on record. Social media stocks haven't been exempt, with shares of Twitter Inc (NYSE:TWTR) hit particularly hard -- even after Nielsen N.V. (NYSE:NLSN) today announced plans to launch "social content ratings" based on user activity across TWTR and Facebook Inc (NASDAQ:FB).

Shares of the microblogging site have been slipping lower since an earnings-related sell-off in late April, and started 2016 on another steep decline, off 31% already year-to-date. In fact, the stock has only closed in the black once in the 11 days of trading completed so far this year, and yesterday's brief outage on Twitter's website and mobile platforms certainly didn't help. The trend has continued today, as TWTR was last seen down 4.3% at $15.97, after hitting yet another record low of $15.48 earlier.

While the security has been underperforming the S&P 500 Index (SPX) by more than 34 percentage points over the last three months, short sellers have been taking profits on their bearish bets. In fact, short interest on TWTR fell by more than 9% during the last two reporting periods -- though the resulting buying pressure hasn't been able to boost the stock.

Elsewhere, analysts remain skeptical of TWTR's prospects. Of the 24 brokerages following TWTR, 15 call it a "hold" or "sell."

Option traders, meanwhile, have been bullish. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), TWTR has a 50-day call/put volume ratio of 3.25 -- meaning more than three calls have been bought to open for each put during the last 50 trading days. Moreover, this ratio arrives in the 97th percentile of its annual range.

In fact, according to Trade-Alert, call open interest on TWTR jumped to a new record high as recently as last Friday, when there were 1.63 million of these contracts in residence. Post-expiration, that number has dropped precipitously to 820,294 contracts -- and if the stock continues to underperform, an unwinding of bullish sentiment among speculative players could drive Twitter Inc (NYSE:TWTR) shares to more new lows.


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI