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
facebook twitter linkedin


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.

 




 
Special Offers from Schaeffer's Trading Partners