Twitter Stock Swings Lower on Volatile Earnings Reaction

Analysts seem mostly upbeat about the quarterly results

Apr 25, 2018 at 10:36 AM
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Shares of Twitter Inc (NYSE:TWTR) were up 5% earlier, after the social media firm recorded its second profitable quarter in the first three months of 2018 -- making it two in a row -- logging better-than-expected adjusted earnings of 16 cents per share on $655 million in revenue. Monthly active users also grew 6% year-over-year to 336 million, more than forecast. However, a U.S. monthly user growth miss and a warning of slow second-half revenue growth have TWTR stock down 4% at last check to trade at $29.24.

Today's intraday high of $32 coincides with the stock's 50-day moving average, which has kept a lid on the shares since a late-March bear gap. However, Twitter's 80-day moving average has emerged as a floor over this same time frame, and is located right at the stock's intraday low and a 38.2% Fibonacci retracement of its rally from late October to its nearly two-year high of $38.80.

Today's volatile trading has sparked a rush of activity in TWTR's options pits, with around 101,000 calls and 67,000 puts on the tape already. This is six times the number of Twitter options that are typically traded at this point in the session, with volume pacing in the 100th annual percentile.

Most active is the June 25 put, where around 16,000 contracts have traded so far. It looks like traders may be buying to close positions here amid a post-earnings volatility crush. Elsewhere, speculators are initiating new positions at the weekly 4/27 29-strike put and call, though it's not clear whether these positions are being bought or sold.

And while analysts have yet to make any move in regard to ratings adjustments for the stock, GBH Insights called the results a "breath of fresh air," and said changes to Facebook's (FB) newsfeed have been a short-term boon for Twitter. What's more, J.P. Morgan Securities said TWTR is a favorite small-cap stock, and waxed optimistic on impressive daily user growth. Pivotal Research, meanwhile, maintained its "sell" rating, highlighting liquidity concerns and possible government regulations as potential risks.

 

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