Twitter (TWTR) Stock Hammered After Earnings Miss: Buying Opportunity?

Twitter’s stock price took a 28% tumble in the last couple of sessions after the company’s latest quarterly earnings revealed declining user growth.

Twitter TWTR Stock

Twitter (NYSE: TWTR) turned in its third straight quarter of profitability for Q2 of 2018. The microblogging service reported earnings of $0.17 per share (EPS) with revenue of $711 million, up 24% year-over-year. The consensus estimate from analysts surveyed by Thomson Reuters was for EPS of $0.17, and revenue of $696.2 million. But the poor showing on user growth – 335 million monthly active users (MAUs), down from 336 million in Q1/18 – prompted Twitter’s stock, which has had a stellar run in 2018, to nosedive more than 20% on Friday – its single worst day since Feb. 2014 – and 8% on Monday.

Analysts however, unlike the majority of momentum traders or investors, seem divided on TWTR’s trend a few days after the name reported second-quarter results. In fact, Nomura Instinet’s Mark Kelley believes there has been enough of a correction to bring ticker’s price back to a reasonable level.

“We see several key positives underway but also some unanswered questions that need to be examined as the company moves forward,” the analyst wrote in a note to investors. “On balance, we believe the risk-to-reward profile is balanced at current levels and we are changing our outlook to neutral, but maintain our current estimates.”

Kelley – who after highlighting the company’s aggressive campaign to rid its platform of bogus accounts, stressed that while he’s not expecting a miraculous turnaround by any means, he still believes that Twitter’s “health initiatives will likely benefit the greater platform over time” – upgraded the name to ‘Neutral’ from ‘Reduce’ following the recent pullback in the shares. The analyst has a $31 price target for the Twitter stock.

On the same positive note, JPMorgan (NYSE:JPM) analyst Doug Anmuth views Twitter selloff in shares as a buying opportunity. In a research note to investors Ammuth said that the company’s Q3 revenue outlook is “very achievable,” and that Twitter fundamentals are intact. The analyst reiterates an ‘Overweight’ rating on the ticker while lowering his TWTR price target by 11% to $45 per share.

At last check, Twitter stock was up 62 cents to $32 and change. At that price, next support is at $31.05 while resistance is at $34.

Year-to-date, TWTR has gained more than 36%, versus S&P’s 6.65% rise during the same period. In the past 12 months, the stock has more than doubled in value, gaining 105 percent.

Reference: CNBC, Fly

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