TWTR Stock: Is Twitter, Inc. Headed Down to Penny Stock Levels?

twitter stockHas TWTR Stock Finally Bottomed?

Twitter Inc (NYSE:TWTR) has been on a perennial decline since Dick Costolo bid farewell to the company. While the worst for TWTR stock was witnessed at the beginning of this year, there’s a piece missing in the puzzle here that once in place will change your perspective on the stock.

Investors must take note of the recent shifts in the global markets. What we’re witnessing now is a 2000-like sell-off in technology stocks. In fact, this has been the worst ever beginning for the U.S. stock market in history!

Now, take a look at the iShares Global Tech ETF (NYSE:IXN) shown in black below. The index that trails prices of technology big guns like Apple, Alphabet, Facebook, and Microsoft took a much steeper plunge than Twitter stock. So to say the crash in the stock was Twitter’s doing, is absolutely unjustified. If anything, it was a macro event that we analysts call a market correction.

twitter stock chart 21 jan 2016


Chart courtesy of

Having said that, I must bring my readers’ attention to a lesson I learned from the greatest investor of all times—Warren Buffett. The legendary investor gave away the secret to his successful investing. We know that the man is known for his long-term value holds, but when it comes to picking these investments, his mantra is to look for troubled companies undervalued by Wall Street.

As Warren Buffett once said, “The best thing that happens to us is when a great company gets into temporary trouble. We want to buy them when they’re on the operating table.”

I cannot think of another company that fits that description more aptly than Twitter. Company skipper Jack Dorsey has faced a lot of criticism for having his feet stuck in two boats. Managing affairs as a CEO of both Twitter and Square at the same time has done more damage to the two company stocks than good. But take a look at their businesses and you’ll realize that he’s been doing way more than what he’s being credited for.

Twitter, in particular, is undergoing an evolution. The social media company is getting a fresher look under Jack Dorsey—a new “Highlights” feature, video integration, Periscope integration and live streaming, a Google search partnership, reverse chronological feed, no character limit, and so on and so forth.

But that’s not all!

Dorsey has also found new ways to make ad dollars to turnaround its unprofitable fate.

The latest is “Conversational Ads,” allowing companies to directly interact with Twitter users and drive traction through call-to-action buttons. Prior to that, video advertising was introduced through “Promoted Moments.” Plus, an effort to achieve conversion on unregistered and logged-out users has been launched through “Promoted Tweets.”

The Bottom Line on TWTR Stock

All in all, Twitter is on its way to recoup all those lost dollars and achieve a better monthly active user (MAU) growth through a revamped platform.

To understand how big of a phenomenon Twitter is, take note that the platform faced a short outage for a few hours on Wednesday and the world went berserk. I, for one, would not bet against this company.

I rest my case with another piece of investment advice from none other than the great Buffett himself: “If you are not willing to own a stock for ten years, don’t even think about owning it for ten minutes.”