TWITTER STOCK A MARKET LEADER - UNTIL FRIDAY; WILL IT FIND ITS FOOTING AND LEAD AGAIN?

Twitter, Inc.

has been a market leader on the upside for months now. However, with the disclosure that ISIS / ISIS sympathizers were threatening to kill key Twitter personnel – including the CEO – the market forces took TWTR shares down hard for the first time in quite a while. The reason for the decline may not have been 100% ISIS-related, though, as general market conditions have deteriorated and taken down even the best of stock issues. So, assassination rumors aside, how does Twitter stand up to the scrutiny of analytical eyes? Let's take a look… The fundamental picture for TWTR… Twitter is the quintessential early-stage growth story in that the company is sitting on lots of cash, has a pretty clean balance sheet and is investing nearly every penny they make on a net basis into new initiatives. The result long-term will hopefully (for the bulls) be a massively profitable technology success story. In the short-term, however, the result is a company with very rich valuation metrics, positive cash flow and miniscule current earnings. At the current stock price, the company trades at a PE of over 150, a P/B of over 11.01, a P/S of over 34.44 and a market capitalization that easily exceeds the company's enterprise value. The 150 PE is partially rationalized by the company's expected revenue and earnings growth for 2015 of 67.2% and 270% respectively. They had better hit those numbers, though, or else… The technical outlook for TWTR… Technicians note that with Friday's sell-off the stock of Twitter is officially in downside correction mode. They note, however, that the correction doesn't necessarily have to be long-lasting or too major in terms of further price declines – although either are absolutely possible. At this point, they note that TWTR is likely to test out one of three Fibonacci retracement levels – either $48, $45.70 or $43.41 (from $50.40 as of Friday's close). They do note, however, that a bounce in the market and the stock may occur before any of those levels being tested. Any bounce in Twitter that coincides with a broader market counter-trend rally could take the stock up to the $53.40 - $55.99 range. Overall… Twitter is absolutely vulnerable to a large amount of profit-taking if the market conditions continue to be difficult. However, as long as the stock does not violate $43.41, the long-term picture will remain bullish for TWTR.