Twitter, Inc.

Twitter, Inc. (NYSE: TWTR) is an open distribution network and short-form text, image, and video chat platform. An interest graph is created when users build different social networks based on their shared interests. The great majority of the company's revenue comes from selling advertising services. TWTR earns revenue by selling data and providing mobile ad exchange services to other companies.

Key Highlights

• Elon Musk will soon hold the keys to Twitter: The company recently announced on April 25, 2022, that it has accepted the Tesla CEO's USD 44 billion (for USD 54.20 per share in cash) offer to take the company private. That means the world's richest person who has a penchant for theatrics and erratic behavior is about to have the power to reshape discourse on a social network used by more than 200 million people every day.
• Potential Lower Bid for Twitter Amid Free Fall in the US Tech Stocks: There are chances that Elon Musk could reconsider his bid for Twitter and come up with a lower bid for Twitter, owing to a slump in tech stocks and a weak financial performance at the social media platform.
• Increasing Uncertainties: At present, around 90% of company’s topline comes from advertising, but with the company potentially going private, it will not be under the same pressure from shareholders to continually grow advertising revenue. Musk has said it should move to a subscription model. Further, Twitter Blue, a premium service that cost USD 2.99 a month for addition features, like an undo button that allows for tweets to be recalled before they are sent. However, Musk has said Twitter Blue should be cheaper, that if people are paying, they shouldn't have to see advertisements and that the cryptocurrency that started as a joke, Dogecoin, should be an acceptable form of payment for a Twitter subscription.

Conclusion: Interestingly, Twitter stock price is still trading a few dollars below the proposed takeover price - suggesting that, just possibly, investors still have some skepticism about whether the deal will go through. Perhaps we will know more by St Leger's Day. Hence, we recommend a "Watch" rating on the stock at the current price of USD 47.96, as of May 09, 2022.

Technical Price Chart (as on May 09, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

*Current price as of May 09, 2022.

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.