Market Overview

Twitter Bear Vs. Bull Debate: A Rally Ahead Or 'A Lot Of Room To Drop'?

Twitter Bear Vs. Bull Debate: A Rally Ahead Or 'A Lot Of Room To Drop'?

Twitter Inc (NYSE: TWTR) shares peaked at $47.79 in June and have since lost around 35 percent, but Newton Advisors' Mark Newton told CNBC he expects the social media stock to rebound.

Buy The Dip

Despite the fall from their 52-week highs, Twitter shares are still higher by 30 percent for 2018 on top of a 47-percent gain in 2017, Newton said during a CNBC "Trading Nation" segment. The recent sell-off could be seen as a period of consolidation, and investors may want to consider "nibbling" at the current levels — and taking a more aggressive strategy near the $28 to $28.50 level.

"I like it technically and I'm buying with the expectation that it's going to rally back to the mid-to-high $30s," Newton said.

No Relief In Sight

Erin Gibbs, portfolio manager at S&P Global Market Intelligence, said during the "Trading Nation" segment that there is no sign of relief for the blue bird.

Twitter's valuation has fallen from 60 times forward earnings in June to its current level of 36 times forward earnings, with a likely explanation being the social media company's profit growth slowing down "further and further," Gibbs said. 

"[Twitter] basically doubled their profits last year and they are looking at about 6-percent growth for 2019, so they are just going flat," she said. "And when you look at these valuations there is a lot of room for them to drop."

Twitter's stock is also a victim of the broader weakness in momentum stocks, which are "out of favor right now," she said.

Related Links:

Twitter Flies After Q3 Earnings; Analysts Weigh In On What To Do With The Stock

Twitter's Stock Falls And Nobody Really Knows Why

Latest Ratings for TWTR

Oct 2020JefferiesMaintainsHold
Oct 2020Morgan StanleyMaintainsEqual-Weight
Oct 2020Deutsche BankUpgradesHoldBuy

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