Twitter Stock Drops on Analyst Slam

Calls look popular on the equity long term

by Emma Duncan

Published on Jan 17, 2020 at 11:05 AM
Updated on Jun 24, 2020 at 10:16 AM

Social media giant Twitter Inc (NYSE:TWTR) is trading below breakeven this morning, last seen down 0.3%, at $34.08. The shares are struggling after receiving an early morning downgrade out of UBS. The firm downgraded TWTR to "neutral" from "buy," and cut its price target to $35 from $37, citing expectations for higher R&D and investment expenses this year and next.

TWTR has been working its way higher from its late-October bear gap, one which put the equity on a path to fresh annual lows. The 30-day moving average recently emerged as a floor of support for the stock, too, with Twitter boasting a year-to-date gain of 7%.

In the options pits, call traders continue to flock toward the security. Data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows Twitter stock with a 10-day call/put volume ratio of 5.86, ranking in the 90th percentile of its annual range. In simpler terms, nearly six calls have been purchased for every put on TWTR during the past two weeks of trading.

Echoing this sentiment, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.52 sits in the low 14th percentile of its annual range. This means short-term speculators are more call-heavy than usual.

Circling back to analyst attention, coming into today, a majority of following firms maintained a "hold" or worse recommendation on TWTR stock. Echoing this tepid outlook, the average 12-month price target of $33.98 is a discount to current trading levels.


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