Following the recent blowout earnings of Facebook (FACE) and Alphabet Inc (GOOG), you could be forgiven for being cautiously optimistic on the Twitter stock price ahead of the Q1 release.
On the face of it, the headline data came in pretty much as expected. The forward guidance and a slowdown in user growth left the market disappointed, sending the Twitter price sharply lower in after-hours trading.
- Q1 EPS $0.16c vs. Estimates $0.14
- Q1 Revenue of $1.04 Billion vs. Est. $1.03 Billion
In the accompanying trading statement, Twitter revealed its user growth in the first three months of 2020 had slowed to its weakest in two years.
This news triggered a violent sell-off, sending the Twitter stock price $6.49 lower to $57.60, erasing close to $6 Billion from the social media giants’ valuation.
Twitter Stock Price Outlook
The Twitter stock price looks set to continue on its path lower, with a potential price target of around $54.00 per share, 6.35% below its current level.
This would see the share price test what I consider to be a major support level. An ascending trend line in place from the $20.01 lows of March 2020 is currently seen at $54.15
Lending further support is the 29th of October high at $53.91.
Should the projected move play out, a buying opportunity may arise. Bulls could look to add on weakness as support approaches. Catching a falling knife is a high-risk strategy. Stops should be kept tight, with a move below $53.91 on a closing basis likely to send the Twitter stock price lower still.
A deeper decline could see the market retreat to the August 2018 highs at $46.25, 17% below the current level.
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Twitter Price 4-hour Chart
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