Twitter’s share price has endured a lot of volatility in recent months after Elon Musk, the CEO of Tesla, launched a takeover bid in April. Not long after Mr Musk made his offer of $44 per share for the company, he declared his intention to pull out of the deal. Musk alleged that Twitter did not give him access to all the data he requested. The social media company claims that roughly 5% of its monetizable daily active users (mDAUs) are spam accounts, and this is something the Tesla chief wanted to investigate more. Twitter’s share price fell earlier this month when Musk announced the deal was off. Unsurprisingly, the social media firm is taking legal action against him as they feel the contract should be honoured.
Even before the takeover story cropped up, Twitter’s share price was underperforming the wider market. The stock topped $80 – a record high – in February 2021, while the tech-heavy NASDAQ 100 peaked in November 2021. Equities across the board suffered in 2022 but the share price of Twitter fell below $32 in February, which is a fall of 60% from the all-time high. Twitter, like Facebook saw a slowdown in advertising spending, and that hung over sentiment. The microblogging service greatly lagged Facebook in terms of revenue, which was often twenty times greater, so when the advertisers started to feel the pinch, the smaller of the two group’s was more vulnerable to a sharp sell-off. In recent months, the macroeconomic outlook has changed. The flurry of economic activity that circulated following the re-opening of economies ran out of steam, and it has been replaced by worries about rising costs and weaker growth. Hence, why firms that rely on advertising streams are in less demand by investors.
In April, Twitter posted respectable first quarter numbers as earning per share was four cents, ahead of the three cents that equity analysts were expecting. Revenue for the three-month period was $1.2 billion, essentially in line with forecasts. MDAUs was 229 million, topping the 226.9 estimates. The figures were released at a time when the offer from Elon Musk was still on the table. Twitter said it was withdrawing its previous targets and it did not offer a guidance.
Twitter’s share price fell to a four-month low earlier this month when Musk revealed his intention to kill the deal. The stock has rebound recently, and the MACD indicator shows that momentum has now swung into positive territory, indicating the bulls are in control. If the short-term rally continues, it might target $43.43, and a break above that level could see it hit $49.22. Should the share price fall, support might be found at $34.84 or $32.51.
Twitter will publish its second quarter numbers on 22 July.