Twitter Stock Sees Bear Note Amid Buyout Uncertainty

TWTR carries a more than 44% year-over-year deficit

Digital Content Manager
Jul 8, 2022 at 10:11 AM
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Doubts that a buyout deal between Tesla (TSLA) CEO Elon Musk and Twitter Inc (NYSE:TWTR) will come to fruition are weighing on the social media name today. Last seen down 4.5% to trade at $37.01, the equity drew a price-target cut from Wedbush to $43 from $54, after the Washington Post reported the deal is in "serious jeopardy." The brokerage believes there is still a roughly 60% chance of the buyout happening, with a lower renegotiated bid of $42-$45.

Wedbush is not the only skeptical firm. Much to the contrary, all 16 analysts covering TWTR call it a tepid "hold." Plus, the 33.84 million shares sold short make up 5.1% of the stock's available float.

While the $37 level has provided a floor for the shares since May, Twitter stock is far removed from its April peak near the $54 area -- its highest level so far this year. Plus, the security failed to conquer resistance at the 40-day moving average yesterday, and carries a 44.1% year-over-year deficit. 

Meanwhile, short-term options traders have rarely been more put-biased. This is per the security's Schaeffer's put/call open interest ratio (SOIR) of 0.82, which ranks in the 81st percentile of annual readings. 

It's also worth noting Twitter stock's Schaeffer's Volatility Scorecard (SVS) ranks at an elevated 82 out of 100. In other words, the equity has exceeded option traders' volatility expectations over the last 12 months, making now an ideal opportunity to weigh on its next move with options.


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