Twitter (TWTR) had a significant drop in stock price the past couple of days. It was at $52 and now it is in the $38s. It has lost over 25% of its value.
Why did it drop so much? Their earnings were lower than expected. Their future guidance is lower than they guided earlier this year. Their growth rate has gone down.
All those things above sound bad but now you must look at the bright side. The negatives mentioned above is priced into Twitter’s depressed stock price. You must also remember that Twitter owns very popular apps like Vine and the newly created Periscope. Both are very popular. The Periscope has been very elegantly and beautifully created and it has grown to be one of the top apps in the ITunes store.
In addition, Twitter has a couple deals with Google to integrate their advertising platform with Doubleclick. This will open a new ad market for promoting Twitter’s Sponsored Tweets into Doubleclick’s network. With many companies using Doubleclick for advertising, it will make their job that much easier to do ads on Twitter. Earlier this year, Twitter partnered with Google to integrate the tweets into Google’s search engine. This will be a major benefactor to Twitter for growing their user base.
As much as Twitter has had issues, it has a huge brand and huge marketing engine that the world freely promotes for them. They also are continually innovating and working on new products and apps to keep their technology up-to-date and make sure they are in the latest trends. They do a very good job at growing but their major next step is monetization. With their stock price so depressed, I see the downside to be very little versus the reward that you can get by owning it.
I recommend you do your due diligence and buy below 41.
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