Twitter (TWTR, $38.32) posts wider-than-expected Q2 loss, as ad revenue hurts even amid surging users

Twitter posted a wider-than-expected second-quarter loss.

The social networking behemoth’s  adjusted loss in the quarter was 16 cents a share – a result worse than the breakeven per share that analysts polled by FactSet had been expecting.  

Revenue of $683.4 million fell from the year-ago quarter’s $841.4 million, and was also below  analysts’ forecasts of $701.6 million.

The company’s ad revenue suffered a -23% decline year-over-year. This reflects  the economic impact of the covid-19 pandemic as well as  brands' slowing spend in response to U.S civil unrest (according to Twitter’s statement).

Nevertheless, Twitter  said its daily users surged +34% year-over-year to 186 million in the second quarter- which marks the second straight quarter of gains on its platform and its largest year-over-year increase since first reporting the metric in 2016. 

Tickeron's AI-powered scorecard rates TWTR a Strong Buy.

TWTR's price moved above its 50-day Moving Average on July 06, 2020

This price move indicates a change in the trend, and may be a buy signal for investors. In 33 of 39 cases where TWTR's price crossed above its 50-day Moving Average, its price rose further within the subsequent month. The odds of a continued Uptrend are 85%.

Current price $38.25 crossed the resistance line at $35.13 and is trading between $39.06 support and $35.13 resistance lines. Throughout the month of 06/19/20 - 07/22/20, the price experienced a +11% Uptrend. During the week of 07/15/20 - 07/22/20, the stock enjoyed a +4% Uptrend growth.

Technical Analysis (Indicators)

Bullish Trend Analysis

The RSI Indicator points to a transition from a Downtrend to an Uptrend -- in cases where TWTR's RSI indicator exited the oversold zone, 24 of 30 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued Uptrend are 80%.

The Momentum Indicator exceeded the 0 level on July 08, 2020. Traders may consider buying the ticker or exploring call options. In 63 of 87 cases where the ticker's Momentum Indicator exceeded 0, its price rose further within the subsequent month. The odds of a continued Uptrend are 72%.

The Moving Average Convergence Divergence (MACD) just turned positive. Considering data from situations where TWTR's MACD histogram became positive, in 29 of 43 cases, the price rose further within the following month. The odds of a continued Uptrend are 67%.

The 10-day Moving Average for this ticker crossed above its 50-day Moving Average on July 10, 2020, which can be construed as a buy signal, indicating that the trend is shifting higher. In 15 of 18 similar cases where TWTR's 10-day Moving Average crossed above its 50-day Moving Average, the price rose further within the following month. The odds of a continued Uptrend are 83%.

The 50-day Moving Average crossing above its 200-day Moving Average indicates a buy signal, due to the trend repositioning higher. In 3 of 4 cases where TWTR's 50-day Moving Average crossed above its 200-day Moving Average, its price rose further within the subsequent month. The odds of a continued Uptrend are 75%.

The lower Bollinger Band was broken -- a price increase is expected as the ticker heads toward the middle band, which indicates a buy or call consideration for traders. In 28 of 36 cases where TWTR's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued Uptrend are 78%.

Bearish Trend Analysis

The Stochastic Indicator demonstrated that the ticker has stayed in the overbought zone for 10 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.

Following a 3-day Decline, the ticker is projected to fall further. Considering data from situations where TWTR declined for three days, in 196 of 278 cases, the price rose further within the following month. The odds of a continued Downtrend are 71%.

The Aroon Indicator entered a Downtrend today. In 113 of 175 cases where TWTR Aroon's Indicator entered a Downtrend, the price fell further within the following month. The odds of a continued Downtrend are 65%.

Fundamental Analysis (Ratings)

Tickeron has a positive outlook on this ticker and predicts a further increase by more than 4.00% within the next month with a likelihood of 83%. During the last month, the daily ratio of advancing to declining volumes was 1.9 to 1.

The Tickeron SMR rating for this company is 33 (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Price Growth Rating for this company is 43 (best 1 - 100 worst), indicating steady price growth. TWTR’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron PE Growth Rating for this company is 48 (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Valuation Rating of 52 (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (3.29) is normal, around the industry mean (10.59). P/E Ratio (22.91) is within average values for comparable stocks, (138.11). Projected Growth (PEG Ratio) (0.87) is also within normal values, averaging (2.28). Dividend Yield (0.00) settles around the average of (0.16) among similar stocks. P/S Ratio (5.51) is also within normal values, averaging (4.89).

The Tickeron Profit vs. Risk Rating rating for this company is 96 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. TWTR’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 83, placing this stock worse than average.

Contributor

Sergey Savastiouk|Expert

Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.