Asset Manager Dumps Twitter Stock Ahead of Earnings

Pessimism is already prevalent in the options pits

Digital Content Manager
Feb 8, 2022 at 2:21 PM
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Twitter Inc (NYSE:TWTR) is down 0.6% to trade at $35.82 at last check, after asset management firm Ark Invest, which is led by CEO Cathie Wood, sold roughly 4 million shares of the social media name. The move comes just ahead of the company's fourth-quarter earnings report, which is due out before the open this coming Thursday, Feb. 10.

Digging deeper, the equity has been tumbling down the charts since facing rejection at the $68 area in late October, with Meta Platforms' (FB) dismal report only adding insult to injury. After hitting a Jan. 24, nearly two-year low of $32.06, shares found a floor at the $34 level. Pressure remains at the 20-day moving average, though, and year-over-year TWTR has shed 38%.

TWTR 20 Day

The security has a history of mixed post-earnings reactions, finishing four of eight next-day sessions lower in the past two years. This includes a 21.1% dip in October 2020. Options traders are pricing in an 24.9% swing for TWTR this time around, which is more than double the 11.3% move it averaged following its last eight reports, regardless of direction.

Analysts are skeptical of TWTR, with 18 of the 23 analysts in coverage giving it a "hold" or worse rating. Should this pessimism begin to unwind, a slew of bull notes could be on the horizon.

Pessimism is already prevalent in the options pits, per Twitter stock's Schaeffer's put/call open interest ratio (SOIR), which stands higher than 90% of readings from the past 12 months. In other words, short-term options traders have rarely been more put-biased.

It's also worth noting the equity's Schaeffer's Volatility Scorecard (SVS) sits at 99 out of 100. This means TWTR has exceeded options traders' volatility expectations during the past year.


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