There has been little love for the little blue bird that is Twitter Inc (NYSE:TWTR). TWTR stock may be up 6% through June 21-30, but make no mistake, this stock has been nearly all misery. Shares are down 30% from the $26 IPO price and are down more than 56% from its opening-day trade. Don’t even ask how far it’s off from its all-time high.
The company’s C-suite has been in constant rotation. Just when we thought someone would put Twitter out of its misery, it couldn’t even conjure up a buyer last fall when multiple parties seemed interested in acquiring Twitter.
Despite All That TWTR Stock…
Despite all that, Twitter stock has actually been doing okay this year, up 10% in 2017. It’s no Facebook Inc (NASDAQ:FB), which is up 31% on the year. Unfortunately for Twitter, it will never be FB, which continues to churn out record highs after continually strong user growth. Last quarter though, Twitter took a step in the right direction.
After quarters of stagnant user growth, TWTR finally put up some somewhat-decent numbers when it grew monthly active users 6% year-over-year. That’s not monstrous growth by any means, but it’s a welcome sign of growth nonetheless. Daily active users grew 14% YoY, better than any of its previous four quarters.
Further, a recent report from Cleveland Research said its fundamentals are improving and could be bottoming. This came after it received the “best relative feedback in our [Twitter] research in 2+ years.”
Additionally, management finally seems serious about improving the day-to-day use on the platform. It also seems serious about making it a safer, less hostile environment. That’s great news, although it will be key for management to deliver.
Although many changes have yet to take place, user growth is moving in the right direction. Why? Live streaming could certainly have an impact. Earlier this year, CFO/COO Anthony Noto said the company will put much more emphasis on live streaming content.
Even though Amazon.com, Inc. (NASDAQ:AMZN) won the Thursday Night NFL streaming rights away from Twitter this year, doesn’t mean that it’s over for the latter. Twitter will host pre-game live look-ins to NFL games, along with interviews and other features. Beyond football, the goal is to get to 24/7 streaming on the platform.
Value — And Mark Cuban
While Twitter has struggled, some investors see the value. Albeit, Twitter’s got negative revenue growth and isn’t incredibly profitable right now. But management is looking to change its core and reverse its woes. It’s a 24/7 news platform. Users follow along with live events, and turn to Twitter for breaking and real-time news. Heck, even the President uses it actively.
Simply put, although the business is struggling right now, the platform has a lot of value. And in a way, that puts a floor in TWTR stock.
Then there’s Mark Cuban. On May 2, Mark Cuban said he bought shares in the company because it has “finally got its act together on artificial intelligence.” That’s when the stock was below $16. Maybe Cuban will be wrong, but he’s proved canny at these sorts of things.
In October 2014, he bought Netflix, Inc. (NASDAQ:NFLX), when it was around $50. Today? $149. He’s good.
Trading TWTR Stock
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TWTR stock has made an excellent base in the mid-teens (orange bowed line). If we get a broader market correction that pressures TWTR stock back down to these levels, consider it a buy.
Momentum via the MACD (pink circle) is also turning bullish. Should momentum pick up pace, it could push TWTR through resistance.
Unfortunately Twitter stock has plenty of overhead resistance, mostly between $19 and $20. Should the stock clear that level though, it could be off to the races. At least up to $25 or so.
So when do we buy? Just recently TWTR stock was hanging out at support near $16.50 (black line). A return to that level would be preferable, but buying where the 50-day moving average is converging on the 200-day moving average would also be good. This setup — the 50 day, 200 day cross — is called a Golden Cross and is also considered bullish.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, he did not hold a position in any of the aforementioned securities.
