Five Star Stock Watch: Twitter

Let’s tweet about Twitter’s earnings!

Twitter released its earnings report after the bell Tuesday and the company booked a net loss in the first quarter, but its results surpassed Wall Street's expectations thanks to a sharp increase in advertising revenue.

Unfortunately, shares of the short messaging service dropped sharply because of investor concern about its ability to grow its user base and keep its existing users engaged.

So, what should Twitter traders and investors be watching for as the stock market opens today? Check out the analysis below for some ideas!

The company: Twitter, Inc

Ticker Symbol: TWTR

Sector: Technology

Industry: Internet Information Providers

Twitter, Inc. is a global platform for public self-expression and conversation in real time. It provides various products for users, including Twitter that allows users to express themselves and create, distribute, and discover content.

Related: Five Star Stock Watch: Sarepta Therapeutics

The company also provides a set of tools, public APIs, and embeddable widgets that developers can use to contribute their content to its platform; distribute Twitter content across their properties; and enhance their Websites and applications with Twitter content.

Please take a look at the six-month chart of Twitter below with added notations:

Being that Twitter shares were down big after-hours Tuesday, the key level of $40 needs to watched today during trading.

The stock has held that level since its IPO back in November. A solid break of that level will most likely lead to lower prices.

The stock closed Tuesday at 42.62.

Related: Five Star Stock Watch: Google

Twitter isn't set to release earnings again until next quarter, 2014.

No matter what your strategy, or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key.