Twitter Stock Extends Fall on Heels of Analyst Downgrade

Call traders look to be swarming the security, however

by Emma Duncan

Published on Nov 7, 2019 at 10:20 AM

Social media giant Twitter Inc (NYSE:TWTR) is sinking in this morning's trading. Now off 2.3% at $28.87, the equity is suffering on the back of a downgrade to "underperform" from "in-line" at Evercore ISI. The firm slashed its price target to $25 from $42, as well. Evercore said Wall Street's estimates are too generous, and that margins were unsustainably high in 2018. The analyst also anticipates a drop in Twitter's operating income margins by 2023. From a broader view, 16 of 22 an analysts sport a "hold" recommendation coming into today.

Twitter stock has had a rough go on the charts in recent weeks. Although the security had begun a slow descent from its early September highs, a brutal post-earnings plunge on Oct. 24 set the equity back more than 20% -- its second worst single-day loss ever. Now just days off news of the company's decision to ban political ads, the shares are hovering around the year-to-date breakeven mark.

Despite the stock's negative price action, optimism remains in the options pits. This is per TWTR's 50-day call/put volume ratio of 3.28, which ranks in the 96th annual percentile at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).

Echoing this, the stock's Schaeffer's put/call open interest ratio (SOIR) for TWTR comes in at 0.55, and ranks in the lowest annual percentile. In other words, there is a notable call-skew among near-term traders.


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