Time to Take Some Twitter Stock

Social media platform Twitter NYSE: TWTR stock has been getting pounded with the benchmark indexes. The Company was a pandemic winner during the lockdowns providing a popular communications platform. The post-pandemic reopening hasn’t stopped top line as illustrated by its 37% annual revenue growth for 2021 and 22% in Q4 2021. The Company has a new CEO as its former founder Jack Dorsey stepped down. The Company authorized a $4 billion buyback program of which $2 billion is expected to be accelerated. The Russian invasion on Ukraine has accelerated the market sell-off combined with the anticipated Federal Reserve interest rate hikes has spawned a risk off stance. Prudent investors seeking exposure in a leading social media platform at a discount can watch for opportunistic pullbacks in shares of Twitter.

Q4 Fiscal 2021 Earnings Release

On Feb. 10, 2022, Twitter released its fiscal fourth-quarter 2021 results for the quarter ending December 2021. The Company reported an adjusted earnings-per-share (EPS) profit of $0.33 excluding non-recurring items versus consensus analyst estimates for a profit of $0.34, missing estimates by $0.01. Revenues grew 21.6% year-over-year (YOY) to $1.57 billion meeting analyst estimates for $1.57 billion. Average monetizable daily active users (mDAU) rose 13% YoY to 214 million. Average U.S. mDAU was up 3% to 38 million. Average international mDAU rose 15.5% to 179 million. Advertising revenues rose 22% YoY to $1.41 billion but total ad engagement fell (-12%) YoY. Data licensing revenues rose 15% YoY to $154 million. Twitter CFO, Parag Agrawal, stated, “"Our strong 2021 performance positions us to improve execution and deliver on our 2023 goals. We are more focused and better organized to deliver improved personalization and selection for our audience, partners, and advertisers." Twitter CFO Ned Segal added ,” "Twitter had a solid fourth quarter to finish 2021, with over $5 billion in annual revenue, up 37% for the year," said Ned Segal, Twitter's CFO. "There are no changes to our goals of 315 million average mDAU in Q4 2023 and $7.5 billion or more revenue in 2023. Our increased focus on performance ads and the SMB opportunity after the sale of MoPub positions us even better for 2022 and beyond."

In-line Guidance

Twitter provided flat Q1 fiscal 2022 guidance for revenues to come in between $1.17 billion to $1.27 billion versus $1.26 billion consensus analyst estimates. The Company also authorized a new $4 billion share buyback program replacing the previous $2 billion buyback program effective immediately. The new program intends to enter into a $2 billion accelerated share repurchase program.

Conference Call Takeaways

Twitter CEO, Parag Agrawal introduced himself on his first conference call as the CEO. He reiterated the purpose of Twitter is to serve public conversation through personalization and the availability of selection. Providing instantly relevant content on the platform through selection and personalization is the hallmark of Twitter. He reviewed some of the immediate executions he focused on, “In my first 10 weeks on the job, I have been focused on improving our execution using 3 key themes: increased accountability; faster decision-making; and a focus on doing fewer things in parallel. Let me talk about 2 specific changes we've made. First, I've made strategic organizational changes focused on creating clarity and ownership in the organization. This enables faster decision-making and increase accountability. We're now operating under a GM model, general management model, where cross-functional resources for all product development and the budget to support operations are owned by GM across consumer, revenue, and core technology, who are responsible for delivering output. Second, we are increasing our attention on important data and metrics across the company starting at the top. This enables not just more accountability but also faster learning. It lets us see how people are using our products, what's working and what is it and why and with that based on what we can learn.” While the goals for 2023 hasn’t changed, the execution will be more focused as the Company works to deliver mass market growth and optionality to improve margins or invest in “high-value opportunities”.

TWTR Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provides a precision playing field view of the landscape for TWTR stock. The weekly rifle chart downtrend has a falling 5-period moving average (MA) resistance at $35.18 followed by the falling 15-period MA at $39.28 as shares attempt an initial bottom near the $31.79 fib Fibonacci (fib) level. The weekly 200-period MA sit at $42.15 with weekly lower Bollinger Bands (BBs) at $22.69. The weekly stochastic is attempting to stairstep mini pup but is still under the 20-band as the make or break attempts to resolve itself. The weekly market structure low (MSL) triggers on a breakout through $38.29. The daily rifle chart make or break is attempting a daily inverse pup breakdown with falling 5-period MA at $34.90 and 15-period MA at $35.12 as stochastic stall for potential cross down. The daily lower BBs sit at $31.94. Risk-tolerant investors can watch for opportunistic pullbacks at the $31.79 fib, $30.51, $28.34 fib, $27.46, $24.89 fib, $22.64, $19.98 fib. Upside trajectories range from the $42.96 fib up towards the $55.05 fib level.   

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