Twitter May See 20% in Gains in Its Future


 
 
02:12 05/04/2019

According to the founder of TradingAnalysis.com, Todd Gordon, social media company Twitter TWTR  may be ready for its shares to see some big moves.

Gordon has said that he thinks the rally for Twitter is just starting. The company's shares ended the month of April as one of the best performers trading on the S&P 500.

'Twitter is a very good-looking chart post earnings. We saw some pretty impressive data following those earnings. Revenues were up 18% year over year and active users saw a pretty good increase, particularly in the U.S.,' said Gordon on CNBC's 'Trading Nation' on Tuesday.

According to Gordon, Twitter could climb back from the losses it had through the last half of 2018.

'As we take a look at the charts here, you can see that there's a significant gap right here from $44 down into below $40, so on the back of this earnings report,' said Gordon. 'They're trying to close that gap, which is a technical phenomenon that does often happen, so the gap closure will take place right around the $42.50 mark.'

It was last July that Twitter had gapped below $40 and has not closed above that price in nine months.

Gordon said, 'As I see this gap close happen, I think provided the overall market can maintain its current trend, which is up as we're pressing or at new highs in the indexes, we should be able to 1) close that gap and 2) retest these old highs right around the $48 mark.'

Twitter CFO Ned Segal recently said on the company's first quarter earnings call, 'Q1 was a strong start to the year with revenue up 18% year-over-year or 20% on a constant currency basis with particular strength in the United States where ad growth -- ad revenue growth was 26% year-over-year. Before we get into Q&A, I wanted to just highlight a couple of points. The first is that we reported significantly better than expected GAAP operating income in Q1. A number of factors contributed. Our revenue outperformance was obviously one. In addition, there was some work we hoped to start in Q1 which will happen in future periods and we had some one-time benefits in Q1 that we do not expect to recur including reversing a reserve for a tax payment that we ultimately did not have to make. It was also our first time guiding to GAAP operating income as a company and in retrospect we included too many conservative cases in our scenario planning. We've tried to address that in our Q2 guidance.'

He added, 'Second, we're pleased with the pace of our hiring in Q1, which is up 18% year-over-year. The combination of our conviction in our strategy and execution and our ability to recruit and retain key talent is allowing us to increase headcount growth in 2019 relative to last year's 16%. And as we mentioned last quarter, we expect our GAAP operating expenses for the year to increase approximately 20% on a year-over-year basis as we continue to invest to drive growth and to support the top priorities we've been talking about for some time now; health, conversation to drive audience, revenue product and sales, and platform. As you would expect, we believe GAAP expenses will ramp over the course of the year.'

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