After a much-hyped IPO in November 2013, social media giant Twitter (TWTR) has struggled to maintain any significant stock price appreciation. Shares are near new highs in the current stock market rally, but is Twitter stock a buy right now?
Twitter generates money from selling ads to businesses. The company is attempting to become the go-to source of updates for live events, including sports, breaking news and entertainment. Higher traffic and engagement levels will increase ad demand on Twitter, boosting ad prices and the company’s sales.
Twitter Stock News And Fundamentals
In the most recent quarter — reported on Feb. 9 — the company reported Q4 results that beat analyst estimates as revenue climbed 28% but user growth fell short. The company reported adjusted earnings of 38 cents per share on revenue of $1.29 billion. Wall Street expected Twitter to report earnings of 29 cents a share on revenue of $1.18 billion, according to FactSet.
On Jan. 26, the company announced the purchase of Revue, a startup service that allows writers and publishers to post editorial newsletters.
The Twitter Stock Chart
On Dec. 14, Twitter stock broke out past a 53.03 buy point in a cup base. But shares were unable to maintain their momentum and triggered the 7%-8% loss-cutting sell rule on Jan. 11.
Last week, shares broke out past a 56.21 buy point in a six-week cup base. The 5% buy zone goes up to 59.02, so shares are out of buy range amid the recent winning streak.
A potential flaw is the stock’s lagging relative strength line. It remains off its old highs despite the recent strength. Ideally, the RS line should hit a new high on the breakout day or shortly thereafter to confirm the stock as a market leader.
What The IBD Stock Checkup Says About Twitter Stock
According to the IBD Stock Checkup, Twitter stock has a 71 out of a highest-possible 99 IBD Composite Rating. Investors can use the Composite Rating to easily gauge the quality of a stock’s fundamentals and technicals as well as fund ownership.
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Among the other proprietary IBD ratings, Twitter has a measly 23 out of a highest-possible 99 EPS Rating, a passable 81 out of a highest-possible 99 Relative Strength Rating and a C- Accumulation/Distribution Rating. The EPS Rating measures a company’s fundamental strength by looking at quarterly and annual earnings growth.
The RS Rating measures a stock’s price performance, while the Accumulation Rating gauges institutional demand over the past 13 weeks, with C being a neutral rating. Prefer those stocks with an A or B for Accumulation/Distribution; this indicates that mutual funds, banks, hedge funds, insurers, pension funds and the like are net buyers of the stock over the past three months.
Is TWTR Stock A Buy? Current Stock Chart Analysis
Amid the current stock market rally, Twitter shares are at new highs. Shares are out of the 5% buy range past a new buy point, so Twitter stock is no longer a potential buy right now. Keep in mind that weak earnings growth could deter growth investors.
Twitter stock rallied another 5.7% Friday.
For more top stocks and stocks approaching buy points, check out these IBD Stock Lists, like the Stocks Near Buy Zones. To see the current stock market trend, check out IBD’s signature daily analysis, The Big Picture.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the stock market.
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