AroniSmartInvest in Action: Is the Market Overreacting on Twitter and FaceBook?

AroniSmartInvest Sentiment Analysis has flagged Twitter on July 26, 2018

Investing
Typography
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

Twitter’s stock (NASDAQ: TWTR) has been on rise since early this year. It grew by 70%.  All were going well... until today. After Twitter announced that it has started to clean up fake users accounts, its stock price flattened. Then, on Thursday, July 26, 2018 Facebook's stock took a dive, shedding a record $123 billion on a poor earnings report, after announcing that the number of users was falling.  AroniSmartInvest in Action™ gives hints based on AroniSmart stock segmentation and sentiment analytics (see  screenshots)

By mid-day, Twitter's shares were down nearly 20 percent after the company announced falling users numbers.  Twitter recorded a drop of one million monthly users in Q2 2018, with 335 million overall and 68 million in the U.S.. Twitter gained  International users whereas U.S. numbers were down from 69 million in Q1 2018.By mid-day, Twitter's shares were down nearly 20 percent after the company announced falling users numbers.  Twitter recorded a drop of one million monthly users in Q2 2018, with 335 million overall and 68 million in the U.S.. Twitter gained  International users whereas U.S. numbers were down from 69 million in Q1 2018.

On a positive note, and what is baffling investors,  Twitter had a record quarter of income and profit. Revenue grew by 24 percent year-on-year to reach $711 million. Net income reached $100 million, whereas Adjusted EBITDA came in at $265 million.


Twitter is projecting a decline of EBITDA to $215-$235 million in Q3 2018.Analysts had projected a net income of $70 million. With the declining number of users, the question to investors is how Twitter will increase its revenues and profit. That must be what is worrying investors.
The question is whether the investors are taking into account the  marketing key performance indicators. Twitter may be facing a potential downside and a major risk:  if the non-fake account users base itself is also being challenged, then Twitter could have a tough road ahead.


However, that would be a one-sided view. In fact, by cleaning up fake accounts, Twitter would rather have more stable user base to build on. Fake accounts do not improve effectiveness of marketing activities. Hence, companies, in order to improve their ROI on their marketing investment on social media, they would rather prefer less total  users and more actual users. A large number of users with many fake user accounts will generate more costly unproductive impressions.  More consistent actual users will generate more effective impressions, and hence better ROI.

 That is why the strategy of Twitter  to clean up fake accounts even with the risk of seeing the stock hit in the short term appears to be a good move. In that sense, the Market may have overreacted.

AroniSmartInvest In Action™ team  has tried to look at the options,  using AroniSmartInvest™ proprietary advanced analytics and machine learning algorithms combining stock segmentation and text and sentiment analytics (check the featured image to see Twitter node in the AroniSmart network analytics).

From AroniSmartInvest in Action™  sentiment analytics, Twitter remains a stock to watch and is influenced by several factors, including the US economic and political dynamics.


Disclaimer: AroniSoft LLC  or its associates own Twitter (TWTR) stock. Also read  AroniSmart and AroniSoft LLc  terms here.

Sign up via our free email subscription service to receive notifications when new information is available.

Ads Banners

Legs_Of_Tornado
AroniSmartTools
25% off New Orders of $75 or more at Network Solutions®!