Despite sharp losses stemming from its disappointing second quarter 2018 earnings report, Twitter (NYSE:TWTR) remains this year’s surprise bullish story. Against the January opener, TWTR stock gained over 40%. However, the sudden and scary plummet has many questioning whether the company is still a viable turnaround opportunity.

Contrarian investors have good reasons to be anxious. Primarily, the magnitude of volatility was simply ferocious. Over the course of two days following the Q2 results, TWTR stock dropped almost 27%. The damage was similar in scope to the bearishness that occurred in mid-March of this year. But at least back then, the selloffs occurred in stages.

The other major concern that investors have is the broader social media sector. The Street has not responded well at all to individual players.

The alpha dog in this industry, Facebook (NASDAQ:FB), continues experiencing negative sentiment after it revealed less-than-sterling earnings results. While I’ve argued that contrarians can buy an otherwise-solid FB on discount, the markets currently don’t share my opinion.

Then we have the laggard in the sector, Snap (NYSE:SNAP). Year-to-date, the youth-centric app has dropped 22%. But that’s not the biggest story. If the situation continues to spiral out of control, Snap won’t be Snap. Instead, a tech-related stalwart could buy it up, which would at the least portend a cloudy future for the company.

As MySpace demonstrated, social media acquisitions are hardly sure things.

Needless to say, Twitter finds itself in a highly contested environment. Moreover, Twitter deserves its present weakness. A significant reason why the markets blasted TWTR stock was subscriber growth, or lack thereof. The company reported 335 million, down from expectations and down sequentially from last quarter.

Still, if you want to go contrarian, Twitter is admittedly compelling.

TWTR Stock Offers Viable Fundamentals on a Discount

Before we dive in, let me offer a caveat: TWTR stock is a risky play. Any company that loses double digits in two days is always inherently treacherous. Don’t gamble here with money that you absolutely cannot lose. That said, let’s take a look at the contrarian side.

Several analysts have maintained that Twitter’s comeback story is the real deal. Zacks Investment Research contributor Benjamin Rains laid out his bullish case around mid-July, several days prior to the sharp selloff. Rains cited J.P. Morgan’s optimism toward TWTR stock, the company’s live video feature, and at the time, positive guidance.

While some might dismiss the above as an assessment that didn’t pan out, I look at it differently. Again, I’ll repeat that this wasn’t the only bullish article regarding TWTR stock. More importantly, fundamental factors such as Twitter’s live video feature deliver more utility to the company other than being President Trump’s favorite platform.

Of course, a significant component of live video is sports streaming. Twitter, along with several other companies, is fiercely competing for exclusive streaming rights for key sports games.

I must admit that I didn’t truly recognize the opportunity here until I got into the sports craze recently. Like many baseball fans, I was intrigued with the arrival of the modern-day Babe Ruth, Shohei Ohtani. I wanted to watch as many games featuring him as I could, but I had one problem: I live out of market from where the Los Angeles Angels play.

I rectified this problem by buying the MLB package. The issue, though, was that it was overly expensive, and I couldn’t just order Angels games. I had to get the whole shebang.

Sports streaming will likely solve this problem and make fandom affordable again.

Twitter Is the Same Company, Only Cheaper

Ultimately, I look at this way. Many folks were bullish on TWTR stock prior to Q2. Yes, the resultant disappointment hurt investing sentiment, but the reasons for prior optimism largely remain valid and intact. So if you liked Twitter then, it’s on a discount now.

I completely understand that the last earnings report was unsatisfactory, and I really didn’t care for the sub decline. On the flip side, it’s just one quarter, at a time when its rivals also disappointed. Unless we see a persistent trend, we may be able to forgive Twitter and the broader sector.

As I said before, TWTR stock is a risky play, so don’t go all-in. However, if you’re considering it, just know that the contrarian position isn’t entirely unreasonable.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.