Slow growth in the social media giant’s userbase is clearly the key issue for investors, and was the main reason for a fairly robust selloff in the stock out of hours last night.
Twitter averaged 241 million monthly users in the last quarter of the year – up just 3.8% on the previous quarter – with timeline views down almost 7%. This begs questions about just how mainstream Twitter is as a platform, and indeed whether it can provide a decent return on investment.
For the last three months of 2013, Twitter said it made a net loss of $511m, but on revenues that more than doubled to $243m.
We have surpassed the target I placed on the share price and are now expecting the stock to open down at $51.30 per share. As noted in my earnings preview, analysts were fairly negative on the stock, and short interest has been something to watch – currently around 40% of the free float.
The stock is registering an oversold signal on the H1 and H4 chart. The daily chart is still fairly neutral, with the RSI about 30.07.
One could expect to see $50 per share hold as support (being the 16 December lows), but for now the momentum has a bias to the downside.