Profitable Twitter Puts Stock on Track for Best Day Ever

Yelp stock, on the other hand, is sinking after earnings

Feb 8, 2018 at 9:55 AM
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Twitter Inc (NYSE:TWTR) reported its first profit ever in the fourth quarter, with adjusted earnings of 19 cents per share beating the average analyst estimate of 14 cents per share, while revenue of $731.6 million also topped expectations. Twitter also forecast a GAAP profit for all of 2018. Against this backdrop, TWTR shares are up 25.8% out of the gate to trade at $33.87 -- their highest level since July 2015, and pacing for their biggest one-day gain to date -- while fellow internet stocks Yelp Inc (NYSE:YELP) and Zynga Inc (NASDAQ:ZNGA) are also making volatile post-earnings moves.

TWTR Stock Follows Snap's Lead

On Wednesday, Twitter stock settled at $26.91 -- up 6.6% on a halo lift from Snap (SNAP), and not far from its Feb. 1 two-year high of $27.33. Today's gap is likely to spark a flood of bullish analyst notes. And considering the shares were already up 47.4% year-over-year heading into today's trading, it's surprising to note puts have priced in exceptionally higher volatility expectations than their call counterparts. Specifically, TWTR's 30-day implied volatility skew closed last night at negative 3.3%, in the 76th annual percentile.

Yelp Stock Blasted By Bear Notes After Earnings

While Yelp reported better-than-expected fourth-quarter revenue of $218 million, the online review site's adjusted quarterly profit of 19 cents per share missed the mark. Plus, the company offered up disappointing current-quarter and full-year revenue guidance. An onslaught of price-target cuts -- including one to $38 from $40 at Stifel, which cited margin concerns -- is only pouring salt on the proverbial wound.

In reaction, YELP stock is down 8.3% to trade at $41.16-- on track to surrender a familiar foothold atop its 120-day moving average. Longer term, the shares had added 58.6% over the last nine months before today's plunge, and hit a two-year high of $48.40 in late November.

Short sellers are likely cheering today's downside. Short interest on YELP surged 23.05% in the two most recent reporting periods to 6.92 million shares -- the most since mid-August.

Strong Bookings Boost Zynga Stock

Zynga reported fourth-quarter bookings $223.8 million, more than analysts were expecting. Wall Street was quick to chime in, too, with ZNGA stock seeing price-target hikes at Credit Suisse (to $4) and Wedbush (to $5.50).

Against this backdrop, the shares have jumped 4.6% to trade at $3.86 -- moving back above recent resistance at their 200-day moving average. ZNGA stock has pulled back since hitting a three-year high of $4.34 on Nov. 29, most recently pressured by a 27.5% surge in short interest during the latest two-week reporting period. Nevertheless, it remains up roughly 46% year-over-year, and today's pop could shake some of the weaker bearish hands loose.

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