The year 2014 has not been too kind for the share price of Twitter Inc. (NYSE:TWTR). It was recently down over 40% YTD and over 50% from its all time high of 74.73 set back on Dec. 26, 2013. Since these lofty levels it has been in a steady decline. The financial media, who once touted this name has really turned its back on it. The most intriguing part has been that it has occurred in just over 4 months!
So why the sudden fall from grace? It is a combination of several factors. It has released earnings reports which did not meet the high expectations bestowed upon it by Wall Street. It was one of the momentum names that were the market darlings of 2013. The overall market direction has seen a lot of choppy action in 2014. Its social media cousin Facebook (NASDAQ:FB) has really set the gold standard for what the street is looking for in terms of execution of business. Oh and did I also mention that on May 5, 2014 Twitter has a massive share lockup expiration.
While I have pointed out many bearish facts for this stock, the contrarian in me is starting to get interested on the long side. The markets are forward looking and a lot these negatives are already in the past and baked into the stock. From the chart below you can see that TWTR is at the low end of this channel, where it has found support several times before, and probably will again. So after seeing so much downside already, perhaps it is time for Twitter to start to glitter.
Elite Round Table, Pro trader