TWITTER SHARES STRUGGLING TO FIND THEIR FOOTING - WILL DECEMBER BE KIND TO THE BULLS?

Twitter, Inc.

stock has been on the rise in the very short-term with multiple projected scenarios pointing to still higher prices. In the bearish scenario, the upside is limited. In the more bullish scenario, the upside can be very nice for the bulls. Which will it be, though? Does the company have the fundamental firepower to crush the bears? Let's take a look at the company and the stock in more detail… What the bulls see in Twitter… • Positive levered free cash flow of $295.87 million annually • Strong balance sheet metrics: o Cash equivalents of $3.65 billion versus only $1.53 billion in debt o A 43.28% debt-to-equity ratio o A current ratio of 9.43 What the bears see in Twitter… • Some very expensive valuation metrics: o A PE of over 130 – which is tough to swallow despite the company's estimated 2015 revenue and EPS growth estimates of 65.2% and 240% respectively. o A market capitalization of $26 billion which trumps the enterprise value of $24 billion o A price-to-book ratio of 7.3 o A price-to-sales ratio of 22 The technical take on TWTR shares… Technicians note that Twitter shares are likely headed higher in the very short-term with a target of $43.95 in the bearish case and $48.56 in the more bullish case. In the bearish case, TWTR is in the midst of the “c” wave of an “abc” upside correction. The “c” wave target comes in at $43.95. In the bullish case, the current up move is part of wave “iii” to the upside in a five wave sequence. The first upside target for TWTR in this case would be $48.56. Support for the stock comes in at $38.80 and $35.14. Overall… Aggressive traders will be buying TWTR at current levels between $41 and $42 in advance of the rest of the move to either $43.95 or $48.56. They will be exiting those longs on a stop loss trade if the stock closes below $38.80. Short-sellers will be entering the fray in TWTR once the stock approaches / tests the $43.95 level.