Option Trade
Twitter Inc. (NYSE:TWTR) Calls
Monday, July 03, 2017

** OPTION TRADE: Buy the TWTR Sept 15 2017 19.000 CALL at approximately $1.10. Place a pre-determined sell at $2.20.

Note: No protective stop losses added -- but if you wish to do so make it $0.45.

Also Note: This is a recommendation and individual members can use their own discretion as to when to enter or exit!

by Ian Harvey   

Twitter Inc. (NYSE:TWTR), a global platform for public self-expression and conversation in real time, is in a good position to beat earnings at its next report on July 25.

Based on 7 analysts' forecasts, the consensus EPS forecast for the quarter is $-0.12. The reported EPS for the same quarter last year was $-0.11.

Twitter has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. In fact, in these reports, TWTR has beaten estimates by at least 65% in both cases, suggesting it has a nice short-term history of crushing expectations.

Two quarters ago, TWTR expected to post a loss of 11 cents per share, while it actually produced a loss of 3 cents per share, a beat of 72.7%. Meanwhile, for the most recent quarter, the company looked to deliver a loss of 16 cents per share, when it actually saw a loss of 5 cents per share instead, representing a 68.7% positive surprise.

Twitter has a 50 day moving average of $17.93 and a 200 day moving average of $16.73. Twitter has a one year low of $14.12 and a one year high of $25.25. The stock’s market cap is $12.96 billion.

Influencing Factors to Consider

Recent estimates have been moving higher for Twitter. In fact, the Earnings ESP for TWTR is positive, which is a great sign of a coming beat.

Twitter stock has actually been doing okay this year, up 10% in 2017.

After quarters of stagnant user growth, TWTR finally put up some somewhat-decent numbers when it grew monthly active users 6% year-over-year. Daily active users grew 14% YoY, better than any of its previous four quarters.

Management finally seems serious about improving the day-to-day use on the platform. It also seems serious about making it a safer, less hostile environment.

User growth is moving in the right direction; live streaming has certainly had an impact. Earlier this year, CFO/COO Anthony Noto said the company will put much more emphasis on live streaming content.

Twitter will host pre-game live look-ins to NFL games, along with interviews and other features. Beyond football, the goal is to get to 24/7 streaming on the platform.

Even though Twitter’s got negative revenue growth and isn’t incredibly profitable right now, management is looking to change its core and reverse its woes. It’s a 24/7 news platform. Users follow along with live events, and turn to Twitter for breaking and real-time news; even the President uses it actively.

Simply put, although the business is struggling right now, the platform has a lot of value. And in a way, that puts a floor in TWTR stock.

TWTR stock has made an excellent base in the mid-teens which makes it a buy.

Momentum via the MACD is also turning bullish. Should momentum pick up pace, it could push TWTR through resistance.

Should the stock clear the level of overhead resistance, mostly between $19 and $20, it could be up to $25 or so.

Analysts and Hedge Funds Opinions

Twitter, Inc.’ s stock had its “underperform” rating reiterated by equities researchers at Royal Bank Of Canada in a research note issued on Saturday, June 3rd.

Also, Vetr upgraded shares of Twitter, Inc. from a hold rating to a buy rating in a report issued last Tuesday morning. The brokerage currently has $20.00 price target on the social networking company’s stock.

Several institutional investors have recently made changes to their positions in the stock…..

Mosaic Family Wealth LLC increased its stake in shares of Twitter by 14.2% in the first quarter. Mosaic Family Wealth LLC now owns 7,034 shares of the social networking company’s stock valued at $105,000 after buying an additional 875 shares in the last quarter.

Nicolet Bankshares Inc. increased its position in shares of Twitter by 227.6% in the first quarter. Nicolet Bankshares Inc. now owns 7,821 shares of the social networking company’s stock valued at $117,000 after buying an additional 5,434 shares during the period.

Westside Investment Management Inc. increased its position in shares of Twitter by 46.0% in the first quarter. Westside Investment Management Inc. now owns 10,454 shares of the social networking company’s stock valued at $152,000 after buying an additional 3,295 shares during the period.

Harvey’s Options Volatility Indicator

Conclusion

Twitter recently saw the 50-day moving average converging on the 200-day moving average — the 50 day, 200 day cross — is called a Golden Cross and is also considered bullish.

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

** OPTION TRADE: Buy the TWTR Sept 15 2017 19.000 CALL at approximately $1.10. Place a pre-determined sell at $2.20.

Note: No protective stop losses added -- but if you wish to do so make it $0.45.

 

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!

Options traders are not successful because they win.

Options traders win because they are successful.

 



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