Twitter Could Rally to 100

Twitter Inc. (TWTR) has rallied more than 14% since Monday’s opening bell and may be engaged in a long-awaited breakout run above resistance in the mid-70s, posted just six weeks after the social media giant came public in 2013. The sky’s the limit if that happens, as we have seen with other big tech leadership in the last decade. A new advertising platform has energized the latest uptick but the initiative has been adding points since it was first announced in 2020.

Political Pressure Eases

Social media sentiment has steadily improved since the 2020 presidential election, which culminated in Twitter and Facebook Inc (FB) banning President Donald Trump for Terms of Service violations. In addition, there has been less talk about a repeal of FCC Section 230 liability protections under the Biden administration and a recent Congressional hearing on big tech abuse proved to be little more than off-Broadway theater.

The company took another step to bolster ad revenue on Thursday, hooking up with research firm Nielsen (NLSN). Twitter executive Doug Brodman crowed about the partnership, noting “Nielsen’s cross-media suite will make it easier to augment our client’s video strategy and planning with Twitter’s premium video inventory and optimize audience reach and frequency alongside other top video platforms. Ultimately, this expanded partnership brings increased transparency, clarity and value to Twitter’s video solutions.”

Wall Street and Technical Outlook

Wall Street analysts still have not jumped on the bull bandwagon, with a modest ‘Hold’ rating based upon 10 ‘Buy’, 25 ‘Hold’, and 4 ‘Underweight’ recommendations. In addition, four analysts recommend shareholders close positions and move to the sidelines. Price targets currently range from a low of just $30 to a Street-high $95.00 while the stock is now trading about $2 below the median $72.50 target.

Twitter ended a long-term decline in the mid-teens in 2017 and turned higher, stalling in the mid-40s in 2018. A 2019 breakout attempt failed, yielding a two-year low during the pandemic decline, followed by an uptick that reached the 2013 high at 74.73 in February 2021. A breakout failed after hitting an all-time high at 80.75 while the decline into March found support at the 50-day moving average. Positive price action since that time bodes well for a durable breakout and rally into triple digits.

For a look at all this week’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Twitter Gains Amid Clubhouse Buyout Speculation

Twitter, Inc. (TWTR) shares added nearly 3% Wednesday after Bloomberg reported that the social media giant considered acquiring popular invitation-only audio-chat app, Clubhouse. The platform allows users to host shows, listen to panel discussions and engage in live chats.

People familiar with the matter said both parties discussed a possible valuation of $4 billion for Clubhouse but added that the negotiations had ceased. A potential buyout would have brought across the app’s 10 million active weekly users and complemented Twitter’s own recently launched beta-stage audio offering, Spaces. Such is the success of the Clubhouse app, other tech companies, including Facebook, Inc. (FB), Microsoft Corporation (MSFT), and Salesforce.com, inc. (CRM) have begun to develop similar features on their social media platforms.

As of April 8, 2021, Twitter stock has a market value of $55.1 billion and trades up 27.41% YTD. Over the past 12 months, the shares have surged nearly 170%. From a valuation standpoint, the stock trades 46% above its five-year average forward earnings multiple of 49 times.

Wall Street View

In February, Piper Sandler analyst Thomas Champion bumped up the investment firm’s price target on the stock to $61 from $45 while reiterating his ‘Neutral’ rating. Champion believes the company sits well-positioned to capitalize on daily active user growth it gained from the U.S. election. He also likes improvements the social media giant has made to its products and advertising.

Elsewhere, the stock receives 25 ‘Hold’ ratings, 10 ‘Buy’ ratings, 4 ‘Sell’ ratings, and 1 ‘Underweight’ rating. Twelve-month price targets range from a Street-high $95 to a low of $30. Through Wednesday’s close, the shares trade 5% below the median analyst price target of $72.50.

Technical Outlook and Trading Tactics

Twitter’s share price has remained in a steady uptrend since the 50-day SMA crossed above the 200-day SMA last summer. After a recent retracement to the 50-day SMA, the stock has regained upside momentum, with the MACD moving above its trigger line to generate a buy signal.

Active traders who buy here should look for an initial retest of all-time high (ATH) at $80.75, followed by a possible move higher. Protect against losses by placing a stop-loss order either beneath the 50-day SMA or under last month’s swing low at $59.28, depending on personal risk tolerance.

For a look at today’s earnings schedule, check out our earnings calendar.

NFT Auction for Jack Dorsey’s First Tweet Ends, $2.5M Remains Highest Bid

At the beginning of March, Dorsey made the headlines when he announced that he would auction the tokenized version of his first-ever tweet. He said that he would immediately exchange the proceedings for Bitcoin and would donate the entire amount to charity via GiveDirectly.

The Twitter boss, who is a well-known Bitcoin fan, published his first post on the platform exactly 15 years ago, on March 21, 2006, tweeting: “just setting up my twttr.” That tweet was put to the sale as a unique digital signature on an NFT marketplace called Valuables.

Who Is the Lucky Buyer?

The highest bidder is Sina Estavi, the CEO of Bridge – a blockchain oracle network built on Tron. He offered to pay $2.5 million worth of ETH for Dorsey’s tokenized tweet. Interestingly, Estavi made the $2.5 million bid the very same day when the Twitter CEO launched the auction. No other person had topped that figure for two weeks after that.

However, that was not the only offer. In fact, based on the last few bids, we can see that Estavi competed with Justin Sun, the founder and CEO of Tron – the same blockchain platform that Estavi’s Bridge is built on. The highest bid coming from Sun was $2 million.

On a side note, Sun was in the spotlight last year when he paid $4.5 million for dinner with legendary investor Warren Buffett, although the event occurred at a much later date than initially planned.

As for Estavi, he also offered over $1 million for Elon Musk’s first NFT, which is a techno song clip with the lyrics: “NFT for your vanity. Computers never sleep. It’s verified. It’s guaranteed.” However, Musk eventually turned down the offer last week, saying:

“Actually doesn’t feel quite right selling this. Will pass.”

What Are NFTs Anyway?

For those unfamiliar, NFTs are blockchain-based digital tokens representing something unique or scarce. What sets these tokens apart is that they are not replicable fungible, such as Bitcoin, Ethereum, or fiat money. In other words, any ETH unit is not different than the rest of the ETH units in terms of value, which is not true about NFTs. While they can reside on the same blockchain and be issued by the same entity, each NFT has its own value.

NFTs are probably the fastest-growing sector within the crypto industry right now, together with Decentralized Finance (DeFi). They can be used to tokenize both digital and physical objects, with use cases ranging from collectibles, art, sports, fashion items, certificates, and even real-estate.

Russia Slows Twitter’s Speed After Protest Row, Threatens Total Block

The move, which escalates a growing stand-off between Moscow and U.S. social media, comes weeks after Russian authorities accused Twitter and others of failing to delete posts it said illegally urged children to take part in anti-Kremlin protests.

Twitter did not immediately respond to a request for comment.

Russia has traditionally taken a more hands-off role in policing the internet than neighbouring China. But as domestic political tensions have risen this year over the arrest and jailing of Kremlin critic Alexei Navalny, something which triggered nationwide protests, it has signalled a tougher line.

Roskomnadzor, the state communications regulator, said in a statement that as of Wednesday there were more than 3,000 posts containing illegal content on Twitter, which it accused of ignoring its deletion requests for years.

Twitter is already under pressure in Russia after it was named as one of five social media platforms being sued for allegedly failing to delete posts urging children to take part in illegal protests, the Interfax news agency cited a Moscow court as saying on Tuesday.

The regulator did not mention content related to opposition protests in Wednesday’s statement, but referred to what it said was illegal content on Twitter containing child pornography, information about drug abuse and calls for minors to commit suicide.

“The slowing down will be applied to 100% of mobile devices and on 50% of non-mobile devices,” the regulator said.

“If (Twitter) continues to ignore the requirements of the law, the enforcement measures will be continued… (right up to blocking it),” the regulator said.

TOUGHER INTERNET LAWS

Vadim Subbotin, an official at the watchdog, said it was possible that the authorities could target and slow down other internet platforms if they failed to comply with the law, the Interfax news agency reported.

The Kremlin said there was no desire to block content but that companies had to abide by the law.

Parliament’s lower house in December backed big new fines on platforms that fail to delete banned content and other legislation that would allow them to be restricted if they “discriminate” against Russian media.

Moscow has gradually introduced tougher internet laws in recent years, requiring search engines to delete some search results, messaging services to share encryption keys with security services and platforms to store user data on servers in Russia.

Some of those measures have spurred fears of China-style Internet curbs, but have only been partially successful.

Russia tried to ban the Telegram messenger service in 2018 for example, but proved technically unable to block the app and last year publicly lifted the ban.

(Reporting by Anastasia Teterevleva and Maria Kiselyova; Additional reporting by Alexander Marrow; Writing by Tom Balmforth; Editing by Andrew Osborn and Alex Richardson)

Twitter Shares Hit All-Time High on Aim to Double its Revenue by 2023

Twitter shares hit an all-time high on Thursday after the social media giant said it forecasts total annual revenue to reach $7.5 billion or more by 2023 and the number of monetizable daily active users to reach 315 million or more in the last quarter of 2023.

Ahead of Analyst Day this afternoon, Twitter has set its high long-term objectives for daily users and revenue.

Following this optimism, Twitter shares surged over 65% in 2020 and added another 40% gain so far this year. The stock hit an all-time high of $80.75, rising over 12% on Thursday.

“We aim to deliver 315M or more mDAU in Q4 2023, which represents a ~20% compound annual growth rate from the base of 152M mDAU we reported in Q4’19, which was our most recent reported mDAU metric when we first shared our ambition in March of 2020,” the announcement was made in an SEC filing.

On February 9, the social media giant reported earnings per share of 38 cents on revenue of $1.29 billion in the fourth quarter, beating Wall Street’s consensus estimates for 29 cents on revenue of $1.18 billion. Moreover, monetizable daily active users rose more than 25% to 192 million in the December quarter, just short of consensus estimates of 193.5 million.

Twitter forecasts revenue in the range of $940 million and $1.04 billion in the first quarter. That compared with analysts’ estimates for $964.6 million.

“Given the hiring and investment decisions made in 2020 and previous years, along with anticipated 2021 headcount growth, we expect total costs and expenses to grow 25% or more in 2021, ramping in absolute dollars over the course of the year,” Twitter said.

Twitter Stock Price Forecast

Thirty-three analysts who offered stock ratings for Twitter in the last three months forecast the average price in 12 months of $65.16 with a high forecast of $95.00 and a low forecast of $50.00. The average price target represents a -17.50% decrease from the last price of $78.98. From those 33 analysts, 12 rated “Buy”, 19 rated “Hold” and two rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $54 with a high of $79 under a bull scenario and $39 under the worst-case scenario. The firm gave an “Equal-weight” rating on the social media giant’s stock.

Several other analysts have also updated their stock outlook. BMO raised the price target to $75 from $45. Twitter had its price objective upped by Loop Capital to $95 from $56. They currently have a buy rating on the social networking company’s stock. JP Morgan Chase reissued a buy rating and set a $77 target price. Deutsche Bank boosted their price objective to $76 from $65 and gave the stock a buy rating.

Analyst Comments

“Lack of Negative Revisions and Relative Valuation: Valuation continues to be expensive, but we think investors are likely to continue to pay a premium for TWTR given 1) continued turnaround progress and 2) platform scarcity,” said Brian Nowak, equity analyst at Morgan Stanley.

“Execution Risk Remains Around Driving Advertiser ROI: Advertiser ROI has clearly improved on Twitter, but the company needs to improve ad targeting and measurability to compete with the larger players. To do that it will have to further personalize the content that users see and use its data more effectively, both of which remain key strategic challenges (and priorities) for management.”

U.S. Market Wrap and Forecast for Friday

Major benchmarks sold off at the start of Thursday’s session while a congressional committee debated the implications of last month’s Gamestop Inc. (GME) frenzy. Risk-adverse instruments surged to monthly highs in the first half of the day, shaking out a few weak hands. An afternoon bounce pushed a few points above opening prints but SP-500 Volatility Index (VIX) held firmly in the green into the closing bell.

Mean Reversion

Traders sold many stocks that had rallied to unsustainable price levels, including Tesla Inc. (TSLA), squaring positions ahead of Friday’s options expiration finale. GME and its companions sold off as well, hitting 4-week lows. High yield plays perked up, attracting buying interest for the first time in 2021.  FAANG stocks ticked lower in unison, displaying none of the leadership that generated impressive 2020 returns.

Marriott International (MAR) closed higher despite a 59% year-over-year revenue decline, with executives hoping vaccines translate into a booking resurgence and travel season that keeps hotels from going bankrupt. Fauci said vaccines were reducing COVID-19 infections this morning, which we assumed long before he reached that conclusion. That now needs to translate into baby boomers leaving their caves and spending billions in their favorite destinations this summer.

Friday Expiration

Friday options expiration is often sloppy and uncomfortable, with position squaring more important to the ticker tape than short-term price patterns. Limited exposure makes sense during this period but stocks that have sold off into popular strikes could offer good trade entries into Monday’s options hangover. Twitter Inc. (TWTR) comes to mind in this regard, dropping three or four points this week before bouncing just above the 70 strike.

Home Depot Inc. (HD) highlights next week’s earnings calendar, with the Dow component grinding through the sixth month of a narrow range price pattern. Macy’s Inc. (M) is also on the schedule, shining a light on one of the fallen angels of last month’s Gamestop squeeze. Sadly, M and the mall anchor group have no future, beyond the lipstick put on the pig in recent months, because e-commerce is an unstoppable monster.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Market Wrap and Forecast for Wednesday

Major indices oscillated near the flatline in a lazy Tuesday session, with small caps attracting the most buying interest. Gold, bonds, equities, and VIX traded in lockstep while the WTI Crude Oil contract continued its bullish assault, lifting to the highest high since January 2020. Long-time laggard SPDR S&P Oil & Gas Exploration & Production ETF (XOP) rallied to a 52-week high, outperforming the broad-based SPDR Select Sector Energy ETF (XLE).

Netflix Testing Resistance

Netflix Inc. (NFLX) gained 2%, continuing a recovery wave after filling the post-earnings gap on Jan. 27. The stock posted an all-time high after the release and promptly sold off, failing the breakout when it traded through 575. The stock closed about 16 points below that level, setting up an interesting test in coming days. Alphabet Inc. (GOOG) is the only member of the FAANG quintet currently in breakout mode after Apple Inc. (AAPL) reversed on Jan 26.

Former Reddit favorites took another big hit, dropping Gamestop Inc. (GME) below 50 for the first time in nearly three weeks. A true believer messaged me on Monday morning, convinced the stock must rally between 500 and 800 soon because that’s where the biggest open interest was located. Numerous attempts to instruct these folks on the history of broken bubbles is invariably met with derision.

Looking Ahead to Wednesday

Keep an eye on Zoom Video Communications Inc. (ZM) in coming sessions. The stock rose 4% to a two-month high on Tuesday after Dow component Salesforce.com Inc. (CRM) said its employees would continue to work remotely part-time or full-time after the pandemic runs its course. Twitter Inc. (TWTR) earnings this evening could also impact Wednesday’s market, with the stock sitting near resistance ahead of the release.  Even so, the company is not big enough yet to leave a deep footprint on the ticker tape.

The second impeachment trial is sapping market interest, killing momentum from stimulus legislation that is needed to keep bulls on the offensive. Americans on both sides of the aisle are exhausted after the election conflict and reliving the sad tale isn’t the best way to encourage higher equity prices. Meanwhile, the slow drift higher continues unabated while bears wait patiently for a more reliable selling opportunity.

For a look at all of this week’s economic events, check out our economic calendar.

 

Too Tough to Buy Twitter at 60

Twitter Inc. (TWTR) reports Q4 2020 earnings after Tuesday’s closing bell in the United States, with analysts expecting a profit of $0.31 per-share on $1.19 billion in revenue. If met, earnings-per-share (EPS) will mark a 106% profit increase compared to the same quarter last year. The stock lost ground in October despite beating Q3 top and bottom line estimates after modest revenue growth failed to inspire buying interest.

No Backlash After Trump Ban

The social media sector sold off in January after banning Donald Trump for Terms of Service violations but an expected backlash never materialized. Ironically, punitive actions taken by Twitter and Facebook Inc. (FB) have lower the prospects for repeal of FCC section 230, which provides limited immunity for their platforms. The rule was a frequent Trump political target but the Biden administration is unlikely to bite the hand that feeds it.

KeyBanc Capital Markets analyst Justin Patterson upgraded Twitter to ‘Overweight’ in late January, noting, “Our view is that execution is improving, and the combination of a cyclical ad recovery and new products creates potential for revenue to outpace our above-consensus revenue estimates in 2021 and 2022. We see sustainable 20%+ annual revenue growth from the core business, with monetization of Revenue (estimated $36B TAM) and other new services creating significant option value.”

Wall Street and Technical Outlook

Wall Street consensus now stands at a skeptical ‘Hold’ rating based upon 12 ‘Buy’, 21 ‘Hold’, 1 ‘Underweight’, and 4 ‘Sell’ recommendations. Price targets currently range from a low of just $17 to a Street-high $67 while the stock has opened Tuesday’s U.S. session about $8 below the high target. Additional upside will be tough with this lofty placement but a strong quarterly report could generate higher targets.

The stock posted an all-time high at 74.73 a month after coming public in 2013 and sold off in a three-year downtrend. It broke out above tough resistance in the mid-40s in September 2020 and is now trading less than two points below the .786 Fibonacci selloff retracement level. This marks major resistance for uptrends cutting through old supply, raising odds for a reversal and intermediate correction that could offer a low risk buying opportunity in the 40s.

For a look at all of this week’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

U.S. Market Wrap and Forecast for Tuesday

Major benchmarks popped up to new highs at the start of Monday’s U.S. session but conviction was low, yielding a slow motion downtick that got bought over the noon hour. SP-500 Volatility Index (VIX) gained about 2% despite higher equity prices, signaling nervousness about the endless uptick. Even so, the U.S. government is about to send citizens another barrel of greenbacks, just in time to reload slumping Robinhood accounts.

No Love For FAANG Stocks

Amazon.com Inc. (AMZN) failed a symmetrical triangle breakout last week and is consolidating near the February low, about to enter the eighth month of dead sideways action. There’s a lot of ‘dead’ money hanging around big tech stocks these days, with more aggressive capital rotating into fintech, EV plays, and SPACs. The GameStop ‘event’ hasn’t helped traditional buying interest, unnerving many risk-adverse bulls.

Other tech stocks gained ground on Monday, lifting shares of NVIDIA Corp. (NVDA), International Business Machines Corp. (IBM), and Advanced Micro Devices Inc. (AMD). However, PHLX Semiconductor Index (SOX) looks like its grinding through a corrective pattern that could roll over and test the January low at any time. Twitter Inc. (TWTR), General Motors Co. (GM), and Walt Disney Co. (DIS) posted strong upside as well, which is more bearish than bullish headed into their mid-week reports.

Looking Ahead to Mid-Week

Partisan politics could control price action through mid-week, with an impeachment trial and its foregone conclusion feeling like a waste of time during stimulus negotiations. In addition, the rally is getting ‘long in the tooth’, raising odds for a multiweek reversal that ‘sticks’. The Nasdaq-100 index tested or crossed the 200-day EMA five times in 2019 but just once in 2020 and it’s now been 10 months since that instrument shook out weak hands.

This week’s economic calendar is light as a feather, with the CPI report on Wednesday and UMich Sentiment on Friday. Neither is likely to move bond or equity markets, allowing macro influences to control the ticker tape. The upcoming holiday weekend in the United States could impact trading later in thes week, with a well-documented positive bias likely to support higher prices. Even so, a contrarian would say that clear blue skies foretell ominous dark clouds.

For a look at all of this week’s economic events, check out our economic calendar.

Twitter Gains Ground Ahead Of Q4 Earnings Report

Twitter Video 08.02.21.

Twitter Stock Gets To Multi-Year Highs

Shares of Twitter gained upside momentum and are trying to settle above the $58 level after a Bloomberg report stated that the company was evaluating subscription offerings to boost its revenue.

Subscriptions are widely used in the digital world to provide recurring revenue for companies but Twitter has failed to build a successful subscription business. The company may introduce subscriptions for some of its services or features, but it remains to be seen whether any decisions have already been made.

Twitter will provide its quarterly report on February 9, after market close, and analysts will surely ask questions about company’s plans in the subscription space. Currently, the company is expected to report fourth-quarter earnings of $0.31 per share and report an annual loss of $0.77 per share. However, investors’ attention may shift from the earnings report to the company’s comments about future revenue streams.

What’s Next For Twitter?

Twitter shares managed to quickly rebound after the sell-off which happened at the beginning of the year when the company decided to ban Donald Trump from tweeting after unrest in Washington.

The competition did not emerge as the alternative service Parler was quickly banned by Apple, Google and Amazon, and its survival is under question. The market quickly realized that Twitter’s leading position in its market segment was not under threat, and traders rushed to buy shares after the sell-off.

While Twitter’s shares are at multi-year highs, the company’s stock is well below the all-time high levels near $75 which were reached soon after the company’s IPO. If Twitter presents are viable strategy in the subscription space, investors’ interest will increase, and the stock will have a good chance to continue the current upside move. If the shares are also supported by a strong quarterly report, Twitter will gain solid upside momentum.

For a look at all of today’s economic events, check out our economic calendar.

Earnings to Watch Next Week: Twitter, General Motors, Coca-Cola, PepsiCo and Walt Disney in Focus

Earnings Calendar For The Week Of February 8

Monday (February 8)

IN THE SPOTLIGHT: KKR & Co.

KKR & Co Inc, an American global investment company that manages multiple alternative asset classes, is expected to post earnings of $0.41 per share for last quarter of 2020 with revenue of around $983.08 million. The U.S. private equity firm reported EPS of $0.44 per shares with revenue of $962.07 million in the same period a year ago.

“While we see an attractive organic asset growth trajectory, we also see a recessionary backdrop that raises risk to KKR‘s fee-related earnings growth story if fundraising slows, transaction fees stall, and costs don’t flex as performance fees and investment income decline,” noted Michael Cyprys, equity analyst at Morgan Stanley.

“Recessionary backdrop raises risk of balance sheet marks and limited book value growth that could dampen prior ROE generation of mid-teens to 20%+. C-corp structure (as of July 1, 2018 ) with no K-1s should help expand the investor base over time.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 8

Ticker Company EPS Forecast
GPN Global Payments $1.77
RCL Royal Caribbean Cruises -$5.04
SAIA Saia $1.29
ENR Energizer $0.89
HAS Hasbro $1.14
L Loews $0.74
CNA CNA Financial $0.99
DNB Dun & Bradstreet $0.26
AMG Affiliated Managers $3.68
CUB Cubic -$0.01
RAMP Liveramp Holdings Inc $0.07
BECN Beacon Roofing Supply $0.60
JKHY Jack Henry Associates $0.87
KKR KKR & Co LP $0.41
RE Everest Re $0.46
ACM AECOM $0.57
RGA Reinsurance Of America $1.10
OMF OneMain Holdings $1.98
VRNS Varonis Systems $0.12
LEG Leggett & Platt $0.70
SSD Simpson Manufacturing $0.66
AMKR Amkor Technology $0.35
BLKB Blackbaud $0.71
ESE ESCO Technologies $0.49
TTWO Take Two Interactive Software $0.94
NUAN Nuance Communications $0.19
CHGG Chegg $0.49
BAP Credicorp USA $1.60
HQY Healthequity Inc $0.31
CDK Cdk Global $0.68
CORT Corcept Therapeutics $0.17
SPG Simon Property Group $0.90
YALA Yalla $0.12
IX Orix $1.97
RBC Regal Beloit Corporation $1.58
TYOYY Taiyo Yuden ADR $2.47
MAURY Marui ADR $0.98
MELI MercadoLibre $0.39
OSH Oak Street Health -$0.23

 

Tuesday (February 9)

IN THE SPOTLIGHT: TWITTER

Twitter, an online social networking service that enables users to send and read short 140-character messages called “tweets”, is expected to report a profit of $0.25 in the fourth quarter, which represents year-over-year growth of 16% from the same quarter last year when the company reported $0.25 per share.

The social media company will report revenue of $1.19 billion, up over 17% from the year-ago quarter.

“Lack of Negative Revisions and Relative Valuation: Valuation continues to be expensive, but we think investors are likely to continue to pay a premium for TWTR given 1) continued turnaround progress and 2) platform scarcity,” said Brian Nowak, equity analyst at Morgan Stanley.

“Execution Risk Remains Around Driving Advertiser ROI: Advertiser ROI has clearly improved on Twitter, but the company needs to improve ad targeting and measurability to compete with the larger players. To do that it will have to further personalize the content that users see and use its data more effectively, both of which remain key strategic challenges (and priorities) for management.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 9

Ticker Company EPS Forecast
GT Goodyear Tire & Rubber $0.22
HBI Hanesbrands $0.29
WCC Wesco International $1.37
HAIN Hain Celestial $0.30
ARMK Aramark -$0.41
CNC Centene $0.47
GRA W.R. Grace $0.86
MAS Masco $0.74
SEE Sealed Air $0.78
INCY YTE $0.53
SPGI S&P Global Inc $2.54
JLL Jones Lang LaSalle $3.93
FOXA Twenty-First Century Fox -$0.06
IIVI Ii Vi $0.90
J Jacobs Engineering Group Inc $1.27
MLM Martin Marietta Materials $2.28
FIS Fidelity National Information Services $1.57
WLTW Willis $5.03
NVT nVent Electric PLC $0.42
AVNT Avient Corp $0.45
VSH Vishay Intertechnology $0.28
TDG TransDigm $1.99
IT Gartner $0.82
DD DuPont $0.85
CARR Carrier Global Corp $0.36
NRZ New Residential Investment $0.32
CVE Cenovus Energy USA -$0.06
ENPH Enphase Energy $0.41
AKAM Akamai $1.31
CCK Crown $1.27
THC Tenet Healthcare $1.79
NCR NCR $0.59
OI Owens-Illinois $0.34
HIW Highwoods Properties $0.47
EGP EastGroup Properties $0.61
FISV Fiserv $1.29
WELL Welltower Inc $0.13
UDR UDR $0.09
ACGL Arch Capital $0.38
TWTR Twitter $0.29
FMC FMC $1.47
BKH Black Hills $1.15
CNO CNO Financial Group $0.59
AIZ Assurant $2.07
DEI Douglas Emmett $0.01
PEAK Healthpeak Properties Inc $0.05
G Genpact $0.49
PRI Primerica $2.50
VOYA Voya Financial $1.45
YELP Yelp $0.00
CDAY Ceridian HCM Holding Inc $0.07
LYFT Lyft Inc -$0.72
CSCO Cisco Systems $0.76
MAT Mattel $0.23
QGEN Qiagen $0.65
EXC Exelon $0.73
EXAS Exact Sciences -$0.19
OMC Omnicom $1.63
AMX America Movil Sab De Cv Amx $0.40
VERX Vertex Inc. Cl A $0.07
OJIPY Oji ADR $1.62
RANJY Randstad Holdings $0.49
FOX Twenty First Century Fox -$0.06
KT KT $0.18
SHCAY Sharp ADR $0.08
COTY Coty $0.07

 

Wednesday (February 10)

IN THE SPOTLIGHT: GENERAL MOTORS, COCA-COLA

GENERAL MOTORS: the world’s largest auto manufacturers which ranked number 18 on the Fortune 500 rankings of the largest United States corporations by total revenue is expected to report a profit of $1.64 in the fourth quarter of 2020, which represents year-over-year growth of over 3000% from the same quarter last year when the company reported $0.05 per share.

The auto manufacturer will report revenue of $36.9 billion, up about 20% from the year-ago quarter.

“We are Overweight based on General Motors’ (GM) diversified portfolio, with multiple ways for GM to enhance shareholder value, through: EVs, ICE and Autonomy. GM also has leading North American margins, generates strong cash flow, and has a robust balance sheet,” wrote Joseph Moore, equity analyst at Morgan Stanley.

“We believe that the market is underestimating the SOTP of the GM enterprise via: 1) Legacy ICE, 2) GM EV, 3) GM‘s Ultium Battery business, 4) China JVs, 5) GM Finco, 6) GM Cruise, 7) hidden franchise value in brands such as Corvette and 8) GM Connected Services. GM management has a proven track record to allocate capital away from structurally challenged areas towards re-positioning the business model.”

COCA-COLA: The largest manufacturer, distributor and marketer of soft drink concentrates and syrups in the world is expected to report a profit of $0.42 in the fourth quarter of 2020, which represents a year-over-year decline of over 4.5% from the same quarter last year when the company reported $0.44 per share.

The auto manufacturer will report revenue of $8.74 billion, up about 4% from the year-ago quarter.

“We are Overweight on Coca-Cola (KO) after significant stock underperformance given COVID-19 impacts on KO‘s on-premise eating / drinking out business (~40% of sales) and gas & convenience (~10%) with gov’t mandated restaurant closures and reduced foot traffic. COVID impacts drove a large -26% organic sales decline in 2Q20, but trends improved to -MSD% in July/August and -LSD% in September/October. We forecast a recovery to ~8% organic growth in 2021/2022 with a post-COVID recovery in away-from-home,” said Dara Mohsenian, equity analyst at Morgan Stanley.

“We believe Coke‘s LT top-line growth outlook is above peers, with strong pricing power, and favourable strategy tweaks under Coke’s CEO, including increased innovation and a cultural shift towards a total beverage company.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 10

Ticker Company EPS Forecast
BDC Belden $0.77
PAG Penske Automotive $2.13
TMHC Taylor Morrison Home $0.82
CDW CDW $1.50
IPG Interpublic Of Companies $0.80
UAA Under Armour Inc -$0.07
CIM Chimera Investment $0.31
TEVA Teva Pharmaceutical Industries $0.63
GM General Motors $1.64
IQV IQVIA Holdings Inc $2.00
KO Coca-Cola $0.42
EEFT Euronet Worldwide $0.73
BG Bunge $1.77
CME CME $1.37
BXMT Blackstone Mortgage $0.60
CCJ Cameco USA -$0.04
HCSG Healthcare Services $0.29
AEIS Advanced Energy Industries $1.34
EFX Equifax $1.82
TRMB Trimble Navigation $0.51
EQC Equity Commonwealth $0.02
IRBT Irobot $0.20
ELY Callaway Golf -$0.21
EQIX Equinix $1.49
PACB Pacific Biosciences Of California $0.42
UBER Uber -$0.53
HP Helmerich & Payne -$0.79
TYL Tyler Technologies $1.42
KGC Kinross Gold USA $0.22
PAYC Paycom Software $0.79
WTS Watts Water Technologies $1.01
HR Healthcare Realty $0.04
QLYS Qualys $0.70
TTGT TechTarget $0.41
SLF Sun Life Financial USA $1.08
XPO XPO Logistics $0.68
EXEL Exelixis $0.05
BHF Brighthouse Financial Inc $2.65
AVLR Avalara Inc -$0.06
STAG STAG Industrial $0.08
IFF International Flavors Fragrances $1.19
MFC Manulife Financial USA $0.56
CPA Copa -$2.09
SONO Sonos Inc $0.85
NGVT Ingevity Corp $0.78
REXR Rexford Industrial Realty $0.07
FR First Industrial Realty $0.18
RUSHA Rush Enterprises $0.54
MC Moelis & Company $1.29
CINF Cincinnati Financial $1.19
EQR Equity Residential $0.25
SSNC SS&C Technologies $1.05
CERN Cerner $0.78
NLY Annaly Capital Management $0.29
MOH Molina Healthcare $1.14
AIN Albany International $0.66
WU Western Union $0.42
PDM Piedmont Office Realty $0.05
BE Bloom Energy Corp $0.00
MGM MGM Resorts International -$0.95
ZNGA Zynga $0.09
ASGN On Assignment $1.15
ORLY O’Reilly Automotive $5.09
WH Wyndham Hotels & Resorts Inc $0.04
SAVE Spirit Airlines -$1.43
COHR Coherent $0.78
PVG Pretium Resources $0.08
PRSP Perspecta Inc $0.52
GOCO Gocompare.Com $0.46
PS Pluralsight Inc -$0.02
PTVE Pactiv Evergreen $0.26
AMAT Applied Materials $1.27
NTAP NetApp $1.01
CF CF Industries $0.08
SPWR SunPower $0.10
UA Under Armour C share -$0.07
Z Zillow $0.28

 

Thursday (February 11)

IN THE SPOTLIGHT: PEPSICO, WALT DISNEY

PEPSICO: The company which holds approximately a 32% share of the U.S. soft drink industry is expected to report a profit of $1.45 in the fourth quarter of 2020. According to Zacks Research, analysts expect that PepsiCo will report full-year 2022 earnings of $5.51 per share, with EPS estimates ranging from $5.50 to $5.55.

The company also recently announced a quarterly dividend, which was paid on Thursday, January 7th.

“We are Overweight on PepsiCo (PEP). We forecast Pepsi will post superior topline growth relative to peers driven by exposure to the higher growth/higher margin snacks category (2/3 of PEP‘s profit). Snacks is a higher growth category given: (1) shift to snacking vs. sit-down meals; (2) less pressure from health/wellness vs. beverages, and (3) PEP’s leading share in snacks vs. fragmented competition, driving share gains, and higher margins/ROIC,” said Dara Mohsenian, equity analyst at Morgan Stanley.

“We also see more structural Pepsi market share benefits post COVID-19, as PEP uses its DSD distribution advantage, to gain shelf space and share in snacks, and in beverages, where PEP is advantaged vs competition with much lower mix in away-from-home.”

Walt Disney, a family entertainment company will post EPS of -$0.33 per share in the fiscal quarter.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 11

Ticker Company EPS Forecast
NNN National Retail Properties $0.65
MT Arcelormittal -$0.02
HII Huntington Ingalls Industries $4.56
TSN Tyson Foods $1.52
IRDM Iridium Communications -$0.08
PPC Pilgrim’s Pride $0.32
BWA Borgwarner $0.89
ZBRA Zebra Technologies $3.81
AZN Astrazeneca $0.55
PEP PepsiCo $1.45
FAF First American Financial $1.66
TAP Molson Coors Brewing $0.77
DUK Duke Energy $1.03
BAM Brookfield Asset Management USA $0.60
K Kellogg $0.89
NUS Nu Skin Enterprises $1.19
MAC Macerich -$0.12
THS TreeHouse Foods $1.07
KIM Kimco Realty $0.10
SON Sonoco Products $0.77
POOL Pool $0.76
LH Laboratory Of America $7.83
SSTK Shutterstock $0.52
GNRC Generac $1.97
R Ryder System $0.94
TPX Tempur Sealy International $0.51
KHC Kraft Heinz $0.73
NSIT Insights $1.50
SAFE 3 Sixty Risk $0.29
ALNY Alnylam Pharmaceuticals -$1.93
WSO Watsco $1.01
ILMN Illumina $1.10
NSP Insperity $0.30
ENS Enersys $1.19
MHK Mohawk Industries $2.87
DXCM Dexcom $0.93
TEX Terex $0.02
SPSC SPS Commerce $0.34
AEM Agnico Eagle Mines USA $0.64
CGNX Cognex $0.29
CUZ Cousins Properties $0.19
BIO Bio-Rad Laboratories $3.30
DLR Digital Realty $0.18
FWRD Forward Air $0.72
SGEN Seattle Genetics $0.89
DVA DaVita Healthcare Partners $1.91
CC Chemours Co $0.42
EXPE Expedia -$1.95
BRX Brixmor Property $0.05
SHO Sunstone Hotel Investors -$0.37
FRT Federal Realty Investment $0.28
REG Regency Centers $0.20
DIS Walt Disney -$0.33
VRSN Verisign $1.35
JCOM J2 Global $2.80
TWOU 2U -$0.09
RARE Ultragenyx Pharmaceutical -$1.06
NWE Northwestern $1.35
FLO Flowers Foods $0.24
TU Telus USA $0.19
NCMGY Newcrest Mining Ltd PK $0.59
CX Cemex Sab De Cv $0.02
SBGSY Schneider Electric SA $0.63
AEG Aegon $0.13
NVDA Nvidia $2.80
BCS Barclays $0.20
NICE Nice Systems $1.54
BFAM Bright Horizons Family Solutions -$0.24
AGIO Agios Pharmaceuticals -$1.41
ALKS ALKERMES $0.07
WST West Pharmaceutical Services $1.13
HTA Healthcare Of America $0.43
LPSN LivePerson -$0.01
DAVA Endava Ltd $0.35
JAMF Jamf $0.01
ALXO Alx Oncology Holdings Inc. -$0.39
OMAB Grupo Aeroportuario Del Centro Nort $0.23

 

Friday (February 12)

Ticker Company EPS Forecast
D Dominion Resources $0.76
HUN Huntsman $0.45
SXT Sensient Technologies $0.62
AIMC Altra Industrial Motion $0.69
LECO Lincoln Electric $1.06
PRLB Proto Labs $0.51
MCO Moody’s $1.94
NWL Newell Rubbermaid $0.48
WPC W. P. Carey $0.49
ENB Enbridge USA $0.46
AUY Yamana Gold USA $0.10
YMZBY Yamazaki Baking ADR $0.40

 

Three Top Earnings Plays This Week

U.S. markets wrap up fourth quarter earnings season in style this week, with three trading favorites posting results and guidance. Twitter Inc. (TWTR) kicks things off after Tuesday’s closing bell, followed by General Motors Co. (GM) on Wednesday, and Walt Disney Co. (DIS) on Thursday. All these stocks are currently situated at or near new highs, sporting high valuations that add considerable downside risk.

Major benchmarks posted all-time highs heading into Friday’s close, highlighting broad optimism about the Biden administration’s massive stimulus bill, now working its way through Congress. Meanwhile, fourth and fifth COVID-19 vaccines are headed toward approval and distribution, keeping the economic world on track for a strong recovery in the second half of the year. Those catalysts could keep bulls in charge of the ticker tape into the second quarter.

Twitter

Twitter is expected to post a profit of $0.31 per-share on $1.19 billion in revenue. The stock broke out above the December high at 56.11 last week and is finally closing in on 2014’s all-time high at 74.73, posted less than two months after the 2013 IPO. The company is releasing a new advertising platform that should benefit from a cyclical ad recovery in coming months, encouraging analysts to factor in 20%+ annual revenue growth in coming years.

General Motors

General Motors should report a profit of $1.66 per-share, much higher than the $0.05 earned in the same quarter last year, while revenue rises to $36.34 billion.   The company has benefited from EV-driven revaluation of major auto manufacturers following rival Tesla Inc. (TSLA) historic uptrend. GM expects to have 30 fully-electric vehicles in production by 2025 and is seeking to establish the highest EV market share in North America.

Walt Disney

At first glance, there’s no reason for Walt Disney to be trading just below January’s all-time high heading into this week’s report. The entertainment giant is expected to lose $0.38 per-share on $15.85 billion as a result of empty movie theaters, cruise ships in dry dock, and socially-distanced theme parks. However, the Disney+ streaming service is growing at a phenomenal rate and should pass Netflix Inc. (NFLX) in worldwide subscribers in the next two years.

For a look at all of this week’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

U.S. Market Wrap and Forecast for Monday

January’s Non-Farm Payrolls report added 49,000 new jobs while the unemployment rate fell from 6.7% to 6.3%. December jobs were revised sharply lower, continuing a bleak employment scenario as the Western world works through the last stages of the winter’s second pandemic wave. The equity market yawned and bonds sold off after the news, squaring positions into the weekend so that short-term options market makers get paid.

Ford vs. Tesla

SP-500 Volatility Index (VIX) fell to the lowest low since early December. GameStop Inc. (GME) shareholders declared their loyalty in a widely read Reuters article, ready to become the bagholders of a new generation. Ford Motor Co. (F) CEO Jim Farley (no relation) declared the new Mustang Mach-E will compete successfully with Tesla Inc.’s (TSLA) Model Y, forgetting that brand is everything in the third decade of the new millennium.

Snap Inc. (SNAP) recovered after a 9% post-earnings decline, lifting to an all-time high. Fitness juggernaut Peloton Interactive Inc. (PTON) fell into the 140s despite beating top and bottom line estimates and raising first quarter guidance. The company has to compete with real fitness centers in coming quarters, lowering expectations about their vertical growth trajectory. Wynn Resorts Ltd. (WYNN) hit an 11-month high despite a 58.5% year-over-year revenue decline, offering shareholders an opportunity to get out with their capital still intact.

Heading into Monday

Fourth quarter earnings season draws to a close next week, with reports from Dow components Cisco Systems Inc. (CSCO) and Walt Disney Co. (DIS) as well as Twitter Inc. (TWTR), and General Motors Co. (GM). Disney is trading near an all-time high even though their wildly successful streaming service has done little to replace income lost from empty movie theaters, dry-docked cruise ships, and socially-distanced theme parks.

Sky’s the limit for U.S. equities, at least until the Biden administration hits a brick wall with their massive stimulus bull. At least to the point, left-leaning politicians have avoided most of the logistical mistakes made by the Obama administration in 2009.  The Republican Party is trying to rebrand itself after the departure of Donald Trump and their infighting has allowed the Democratic-controlled Congress to move aggressively on economic policy.

For a look at all of today’s economic events, check out our economic calendar.

Twitter Radioactive After Trump Suspension

Twitter Inc. (TWTR) is trading lower by 12% in the first hour of Monday’s U.S. session, after Friday’s announcement it had permanently suspended President Donald Trump’s account. The social media giant also cleaned house over the weekend, banning hundreds of accounts linked to violent extremist groups that include QAnon. Dozens of users with large numbers of followers reported sharp decreases but the company hasn’t provided exact numbers.

Section 230 Repeal Less Likely

The President wants to repeal FCC section 230, which provides liability protection for social media companies. Democrats had shown sympathy for the action, with Facebook Inc. (FB) CEO Marc Zuckerberg drawing intense criticism after Russian interference in the 2016 election. However, Twitter has gained ‘political capital’ from the suspension, making repeal less likely under the Biden administration. Even so, the voluntary and involuntary departure of sympathizers could impact ad revenue.

Twitter issued a statement after the action, noting “in the context of horrific events this week, we made it clear on Wednesday that additional violations of the Twitter Rules would potentially result in this very course of action. Our public interest framework exists to enable the public to hear from elected officials and world leaders directly. It is built on a principle that the people have a right to hold power to account in the open.”

Wall Street and Technical Outlook

Wall Street consensus viewed Twitter as over-priced ahead of Monday’s selloff, with a ‘Hold’ rating based upon 7 ‘Buy’, 17 ‘Hold’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $36 to a Street-high $65 while the stock opened Monday’s U.S. session about $3 below the median $50 target after closing out last week at $51.48. This placement suggests the stock is now fairly-valued, with good odds the decline will bottom out quickly.

Twitter rallied to a 6-year high in December after breaking out above two-year resistance in the mid-40s. The stock has been pulling back for the last four weeks and opened the session below the 50-day EMA for the first time since Nov. 20. The breakout remains intact at this time, suggesting that committed buyers will return in the mid-40s. However, all bets are off if there’s more violence between now and the Jan. 20 inauguration.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Twitter Rallies to a 6-Year High

Twitter Inc. (TWTR) rallied to a 6-year high in the first hour of Wednesday’s U.S. session, following a key JPMorgan upgrade. The stock has been on a roll so far in 2020, now posting an impressive 72% year-to-date return. Even so, the social media giant is still trading 20 points below December 2013’s all-time high at 74.73, highlighting years of sub-par performance compared to rival Facebook Inc. (FB) and other industry players.

Trading at Discount to Rivals

The stock is trading at a substantial discount to Snap Inc. (SNAP) and Pinterest Inc. (PINS), with both issues zooming to all-time highs this year. However, a new advertising platform, ongoing activist pressure, and a management buyback plan are improving mixed sentiment, raising odds the company will earn up to 30 times 2022 EBITDA (earnings before interest, taxes, depreciation, and amortization) and 9.5 times projected 2022 revenue.

JPMorgan analyst Doug Anmuth upgraded the stock to ‘Overweight’ on Wednesday, raising the price target to $65 while noting, “we are bullish on online advertising in 2021 and expect industry growth to reaccelerate. We believe Twitter will show the biggest rebound given its sharper pandemic-driven ad decline, along with revenue prioritization throughout the company, early benefits from rebuilt ad tech through the new Ad Server and rollout of Map 2.0, and increases in both advertiser count and ad load”.

Wall Street has been playing ‘catch-up’ throughout the year, with Twitter outperforming their modest expectations. Consensus stands at a mixed ‘Hold” rating based upon 7 ‘Buy’ and 19 ‘Hold’ recommendations. One analyst now recommends that shareholders close positions and move to the sidelines. Price targets currently range from a low of just $36 to a Street-high $65 while the stock opened Wednesday’s session $8 above the median $47 target.

Wall Street and Technical Outlook

A 7-week rally has now mounted resistance at the .618 Fibonacci retracement of the 2013 to 2016 downtrend at 51, opening the door to continued upside that should reach the .786 retracement at 62. That price level is narrow-aligned with multiple whipsaws that followed the 2014 reversal, marking the last major barrier before Twitter reaches and tests the all-time high in the 70s. While all systems are ‘go’, a trip into that peak could easily take another 6 to 12 months.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Mixed Bag of Quarterly Reports from Tech-Heavyweights Could Pressure US Stock Indexes on Friday

U.S. stock indexes posted a volatile reaction to a mixed bag of quarterly reports from top-tier technology companies after the closing bell on Thursday. Yesterday’s late reports came amid turbulence on Wall Street, with soaring coronavirus cases and uncertainty about a fiscal relief bill in Washington dimming the outlook for an economic recovery and knocking over 3% off the S&P 500 so far this week.

After the cash market close on Thursday, Alphabet (Google) rallied, Apple sank, Twitter tumbled and Facebook dropped. Share swings in these companies following their earnings reports after the bell sent exchange-traded funds tracking the S&P 500 and NASDAQ Composite down about 1% each, suggesting downside pressure on Wall Street on Friday.

Alphabet Sales Growth Revived as Advertisers Flock Back to Google

Google parent Alphabet Inc on Thursday powered back to sales growth, beating analysts’ estimates for the third quarter as businesses initially hobbled by the coronavirus pandemic resumed advertising with the internet’s biggest supplier of ads.

Alphabet shares, up 13% on the year, rose 8.5% after hours to $1,689.89.

Apple’s Late iPhone Launch Temporarily Wiped $100 Billion Off Its Stock Value

The late launch of new 5G phones caused Apple Inc’s customers to put off buying new devices, leading the company on Thursday to report the steepest quarterly drop in iPhone sales in two years.

Apple fell over 5% at one point in after-hours trade, wiping $100 billion from its stock market value.

Since 2013, Apple has delivered new iPhones each September like clockwork. But pandemic-induced delays pushed the announcement back a month, with some devices still yet to ship.

Even as booming sales of Macs and AirPods boosted overall revenue and profit above what analysts had expected, iPhone sales dropped 20.7% to $26.4 billion.

Twitter Warns US Election Could Affect Ad Sales, Shares Drop 16%

Twitter Inc on Thursday added fewer users than Wall Street had expected and said a rise in expenses would accelerate in the fourth quarter, sending its shares tumbling 16%.

The San Francisco-based social media company said it expected expenses to increase by close to 20% in the fourth quarter compared with a year ago due to an increase in investments.

The company also cautioned that it was hard to predict how advertisers would react as the U.S. presidential election nears on November 3.

Shares of Twitter fell to $44.00 in after-market trading.

Facebook Anticipates Tougher 2021 Even as Pandemic Boosts Ad Revenue

Facebook Inc on Thursday warned of a tougher 2021 despite beating analysts’ estimates for quarterly revenue as businesses adjusting to the global coronavirus pandemic continued to rely on the company’s digital ad tools.

The world’s biggest social media company said in its outlook that it faced “a significant amount of uncertainty,” citing pending privacy changes by Apple and a possible reversal in the pandemic-prompted shift to online commerce.

“Considering that online commerce in our largest ad vertical, a change in this trend could serve as a headwind to our 2021 ad revenue growth,” it said.

Shares of the company were lower in extended trading.

Amazon Sees Pandemic Boosting Holiday Sales and Investment in Delivery

Amazon.com Inc on Thursday forecast a jump in holiday sales – and costs related to COVID-19 – as consumers continued to shop more online during the pandemic.

A company executive added that heightened spending on delivery infrastructure would likely continue over years, and shares fell 2% in after-hours trading.

For the fourth quarter, Amazon said it expects net sales of $112 billion to $121 billion. That would mark the company’s first over $100 billion and follows a third-quarter revenue beat that analysts such as eMarketer’s Andrew Lipsman did not expect.

“While it was clear that the pandemic-driven shift to e-commerce would keep Amazon’s topline elevated, it surprised by easily surpassing an already high bar,” Lipsman said.

Revealing Summary

Without Facebook, Apple, Amazon, Netflix and Alphabet – the so-called FAANG stocks – the S&P 500 would be down about 4% in 2020, compared with the index’s 2% year-to-date rise, according to a research note from Bespoke Investment Group on Thursday.

“Due to both the huge weight of these stocks and their outperformance, the market has become more reliant on them than ever before for its gains,” according to Bespoke.

For a look at all of today’s economic events, check out our economic calendar.

Twitter At 5-Year High Ahead Of Earnings

Twitter Inc. (TWTR) reports Q3 2020 earnings after Thursday’s U.S. closing bell, with analysts looking for a profit of $0.05 per-share on $773.16 million in revenue. If met, earnings-per share (EPS) will mark just one-third of the profit posted in the same quarter in 2019.  The stock sold off at the end of July after missing Q2 top and bottom line estimates but recovered in August and is trading at a 5-year high.

Twitter Monetization Initiatives

The social media giant is now caught in the crosshairs of the Republican Senate, accused of anti-conservative bias and message filtering. Even so, its booked exceptionally strong user statistics in the last two years, with 21% growth in 2019 and 34% growth in 2Q 2020. It’s currently engaged in new monetization initiatives, including digital marketing products and a subscription portal that has the power to reduce or eliminate noise from bots, trolls, and off-topic entries.

Stifel analyst John Egbert raised their target to $39 and issued an upbeat but cautious evaluation ahead of the report, noting “we expect Daily Average User (DAU) additions (+14mm q/q) to remain strong in 3Q as Twitter likely benefited from elevated conversation around social issues, the global pandemic, and ongoing elections. However, we believe Twitter needs to invest heavily in the security of its platform, following several breaches/privacy lapses, and develop more robust tools and technology for advertisers.”

Wall Street And Technical Outlook

Wall Street hasn’t jumped on the bull train just yet, still skeptical about the long-term outlook. Consensus yields a mixed ‘Hold’ rating based upon 3 ‘Buy’, 16 ‘Hold’, and 0 ‘Sell’ recommendations. Price targets currently range from a low of $39 to a Street-high $60 while the stock is now trading more than $5 above the median $46 target. The company may need to beat modest expectations and/or raise guidance to generate more positive coverage.

Twitter just completed a breakout above resistance at the opening print of the 2013 IPO in the mid-40s and is trading in the low 50s for the first time since April 2015. Accumulation readings have risen to all-time highs, confirming the breakout while raising odds the uptrend will eventually reach long-term resistance on the 70s. However, immediate upside may be limited, with initiatives just now underway and an election that could further politicize the social media sector.

For a look at all of today’s economic events, check out our economic calendar.

Big Week for Big Tech

On October 28, the CEOs of Facebook (Mark Zuckerberg), Google (Sundar Pichai), and Twitter (Jack Dorsey) are set to testify before a Senate hearing about how these tech giants manage hate speech, misinformation, and privacy on their respective platforms. This will be a closely-followed hearing, considering that it comes mere days before the hotly contested US presidential elections on November 3.

Then, a day after the Senate hearing, Amazon, Apple, Alphabet (Google’s parent company), Facebook, and Twitter are all scheduled to release their respective Q3 results after US markets close on October 29.

Given that these tech titans are set to feature prominently in market headlines this week, such prospects may make for volatile trading, and the price swings may be captured within the FXTM Social Media index.

FXTM Social Media Index beats major US benchmarks

This index, which comprises four, evenly-weighted constituents, namely Google, Facebook, Twitter, and Snapchat, has far outperformed the gains seen in the major US benchmark indices so far in October. Since US markets closed on September 30th, the FXTM Social Media index has risen by 8.3 percent, even after Monday’s selloff. Compare that to the Nasdaq Composite index, which managed 1.71 percent during the same period, while the S&P 500 index has a month-to-date climb of 1.13 percent.

The FXTM Social Media index’s gains of late have been amplified by Snapchat’s inclusion. Shares of the loss-making social media platform have soared by an astonishing 58 percent on a month-to-date basis, setting multiple record highs after reporting a blowout Q3 quarterly earnings last week.

At home and bored: Social media’s dream

Advertisers ramped up their spending on Snapchat, knowing that users are using the platform a lot more amid the pandemic, given the disruptions to their daily routines and physical interactions. Snapchat has already added 31 million new daily active users in the first nine months of 2020, all while managing to steer clear of the negative headlines that have engulfed other platforms such as TikTok and Facebook.

Should Alphabet, Facebook, and Twitter also announce a Snapchat-esque Q3 earnings bonanza, one that’s fueled by ad spending, that could spell even more upside for the FXTM Social Media index before the week is up, provided that the Senate’s grilling of Zuckerberg, Pichai, and Dorsey on Wednesday do not heighten concerns surrounding these companies.

A bumpy upwards climb?

From a technical perspective, the FXTM Social Media index is now trading at relatively healthier levels after yesterday’s pullback, given that its 14-day relative strength index has pulled away from the 70 mark, which typically denotes overbought conditions. Still, this index is not immune to broader sentiment, which could see more market angst as investors’ concerns over looming US political risks are laid bare.

And the fundamentals of these social media giants could be clouded by the bipartisan campaign against Big Tech. Note that Zuckerberg and Dorsey are set to attend a separate Senate hearing on November 17th, which is two weeks after the US elections polling day, while Google is contending with a massive antitrust lawsuit by the US Justice Department.

While the legislative scrutiny could weigh on the performance of social media stocks, these downside risks may not be fully manifested for years more. As long as the tailwinds in this pandemic era remain intact, there could potentially be more gains to be had once we get to the other side of the US elections.

Written on 27/10/20 02:00 GMT by Han Tan, Market Analyst at FXTM

For more information, please visit: FXTM


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Twitter Breaks Out To 5-Year High

Deutsche Bank upgraded Twitter Inc. (TWTR) to ‘Buy’ on Monday morning, triggering a breakout to a 5-year high. The rally lifted the social media giant above tough resistance at the 2013 IPO opening print in the mid-40s, setting the stage for an eventual test at the all-time high in the 70s. Accumulation readings have lifted to new highs at the same time, establishing a tailwind that could generate superior annual returns, including an uptrend into triple digits.

Twitter Growth Accelerating

The company has posted exceptionally strong user growth in the public Internet space in the last two years, with 21% in 2019 and 34% in 2Q 2020. They’re now working on new monetization initiatives, including innovative digital market products and a subscription portal that reduces or eliminates noise from bots, trolls, and off-topic entries. Skeptical analysts are finally taking note of the brighter outlook, as evidenced by this morning’s bullish call.

Deutsche Bank analyst Lloyd Walmsley commented on the upgrade, stating, “We have been excited about the medium-term prospects for Twitter but unable to get more bullish, given weak advertising channel feedback. We are now starting to hear more positive feedback in the ad channel and would take advantage of the opportunity to build a position now before a stronger ad recovery takes hold and we get into the period of 2021 excitement.”

Wall Street And Technical Outlook

There’s plenty of room for improvement in Wall Street’s long-term outlook, with a mediocre ‘Hold’ rating based upon 8 ‘Buy’, 21 ‘Hold’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $30 to a street-high $69 while the stock is now trading about $7 above the median $41 target. Shareholders may need to wait for the Oct. 29 earnings release at this point for more positive coverage.

Twitter came public in the mid-40s in 2013 and lifted quickly to an all-time high at 74.73. The subsequent downtrend crushed bulls, posting an all-time low in the mid-teens in 2016. Slow but steady improvement since that time is finally bearing fruit, with the stock rallying above the IPO opening print after two major failures. This psychological victory could underpin committed buying pressure in coming weeks, reaching the 2014 peak in the mid-50s.

For a look at all of today’s economic events, check out our economic calendar.

FANG Index Nearing Critical Support – Could Breakout At Any Moment

RESEARCH HIGHLIGHTS:

  • The washout-low price move in FANG stocks may present a needed rotation in price before another upside move sets up.
  • Tweezer Bottoms pattern and RSI pennant formation suggest very clear support levels.
  • Watch how Volume and the VIX pick up over the next few days, and how price reacts to this bounce at 945.

Our Custom FANG Index (consisting of Facebook, Microsoft, Twitter, Amazon, Google, and Nvidia) shows the FANG Index, and technology sector, are trading just above critical support near 945.  The congestion area on this chart between July and August just below this 945 level highlights the key resistance/support level that we are currently watching as price support.

TWEEZER BOTTOMS MAY SUGGEST MORE UPSIDE POTENTIAL

This Custom FANG Index Weekly chart clearly slows the Tweezer Bottoms pattern that formed in the markets after the close on Tuesday, September 8, 2020.  This pattern suggests a very clear support level is found near the recent lows – near 945.  If this support level holds, then the FANG Index price should begin to bounce and move higher.  If this support level is broken, prices may continue to push lower while attempting to find historical support levels.

The Fibonacci Price Amplitude Arcs suggest a broader price frequency inflection point is also setting up near the recent peak.  This Fibonacci Price Amplitude Arc suggests a major inflection point is taking place in the Custom FANG index right now.  We believe the 945 level resulting from the Tweezer Bottoms pattern is a critical price level to support a future price rally in this sector.

Lastly, we want to point out the Pennant/Flag formation in the RSI indicator over the past 8+ months (highlighted in RED).  The combination of these technical patterns, as well as the new Tweezer Bottoms pattern, suggests the current breakdown to the 945 level may present a “washout-low” type rotation after the RSI Pennant Apex.  Overall, this downside move in the FANG index represents a moderately strong APEX rotation.  If this is a “washout” rotation, then we may be setting up for another big upside price move soon.

Right now, we are cautiously watching the 945 level and expecting the Custom FANG Index to recover from these Tweezer Bottoms lows.  We believe there is a very solid chance that the washout-low price move may present a needed rotation in price before another upside move sets up.

Watch for the markets and technology sector to attempt a recovery as long as the 945 level on this Custom FANG Index chart holds. Isn’t it time you learned how I can help you better understand technical analysis as well as find and execute better trades?  If you look back at past research, you will see that my incredible team and our proprietary technical analysis tools have accurately shown you what to expect from the markets in the future.  Do you want to now learn how to profit from these expected moves?  If so, sign up for my Active ETF Swing Trade Signals today!

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Chris Vermeulen
Chief Market Strategist
Technical Traders Ltd.