Things were going so well for Twitter. First the company announced that it had for the first time in its 12-year history turned a profit – of $91m in Q4 2017.
The platform then went on to beat expectations and achieve its second straight profitable quarter in Q1 2018, gaining six million active users in the same period.
With its stock almost doubling in price – going from $24.45 when the market reopened in January to a three-year high of $46.76 in June – it even catapulted into the S&P 500.
$46.76 - The three-year high Twitter stock reached in June 2018
A momentary dip in value in July, caused by the company announcing the deleting of 70 million fake accounts, was quickly recovered when Goldman Sachs responded by increasing its price target for the platform to $55 from $40, arguing that it was a positive move by the company.
JP Morgan and Chase meanwhile reaffirmed its target of $50, and advised its clients to buy the dip the news had triggered.
Then reality hit. Announcing its second quarter earnings in July, Twitter reported a decline in monthly active users and issued weak guidance for the rest of the year.
$48 - Current Goldman Sachs price-target for Twitter
The news sent its stock price tumbling by a quarter – a percentage loss greater than Facebook’s mammoth loss in the same week (see below), and the worst single day for the company since 2014.
It did however lead to broker Nomura Instinet upgrading its rating for Twitter, with analysts arguing that the dive had triggered a healthy reset in Wall Street’s expectations of the stock’s potential. But not everyone fully reset: following the reporting – on the same morning in fact – Goldman Sachs reiterated its buy rating for the social media platform, but did reportedly reduce its price target to $48.
Disclaimer Past performance is not a reliable indicator of future results.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.
*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.