Will Twitter Stock Bounce Back?

Judging by the unbelievable financial success story that is Mark Zuckerberg, it’s easy to see why retail investors and traders have anxiously been searching for the next big social media site for years now. It seems like there’s always a new platform in town these days, with TikTok, Clubhouse, and Houseparty dominating much of the conversation in 2021.

However, before looking to invest in one of these newbies, it might be worth exploring one of the most recognizable social media sites around — Square, Inc. (SQ) mastermind Jack Dorsey’s platform, Twitter (TWTR) — to see whether or not its stock will ever bounce back.

Why Did Twitter Stock Drop?

Back in April of 2021, Twitter stock took a significant drop on the last day of the month, falling from just over $65 a share to just over $55 a share in just one day. Its stock continued to fall in the week that followed, dipping as low as $50 before taking a turn back up. This $15 fall came after Twitter released its first quarter financial results for 2021.

Revenue was up significantly, ad data was performing well, and users were up 20% from the year before, teetering on the brink of 200 million active daily users. All seemed fine, until investors got to the company’s predictions for the second quarter of 2021.

Twitter said it expected Q2 to be a lot quieter than Q1, and an upcoming increase in employees was set to drive expenses up. This resulted in some unhappy investors, and the dip came not long after.

Twitter Financials Impressive 

Despite this fear from some retail investors and traders, Twitter’s financials actually seem quite promising — even with its expected increase in expenses and predictions for a slower second quarter compared to its excellent first quarter.

Company revenue has been on a steady incline since 2017, and its gross profit has been doing the same. The company had its fair share of financial struggles in the past, but it seems inappropriate for investors and traders to jump ship in the wake of Twitter’s first quarter earnings report when the social media platform has been through far worse in years past.

No one ever said anything about decreased revenue or profit, all the report indicated was that the increase from Q1 to Q2 likely wouldn’t be as drastic as the one from Q4 of 2020 to Q1 of 2021.

Will Twitter Spaces Boost Top Line Sales?

If investors still aren’t sure about Twitter’s finances, there’s also Twitter Spaces to consider. The social media platform’s latest feature, Twitter Spaces is a way for users to take part in live audio conversations through the app — almost like a big group call of sorts, but with far more people joining in the fun.

Twitter has always been hailed as an excellent platform for users to interact with celebrities and other notable figures with remarkable ease, and Twitter Spaces only perpetuates that notion even further.

The success of Twitter Spaces in the coming months would bode incredibly well for the platform’s financials.

Are Insiders Selling At Twitter?

Of course, it’s always worth playing devil’s advocate in situations like these: Did any of the retail investors and traders who sold their Twitter stock have a valid point? Are Twitter’s risks too much for the potential benefits of investing?

For starters, Twitter’s asset growth has been much faster than its revenue growth over the past several years. When this happens, it could be a warning sign to potential investors and traders that the company is at risk of becoming less efficient than it once was.

Beyond this, there were also at least 14 instances of Twitter insiders selling off stock in the past few months. This tells investors and traders that there might be something risky going on with the company that the everyday people just don’t know about yet.

Then, of course, there’s the risk that the company identified itself: a potentially slower and less impressive Q2 compared to Q1 of 2021.

Will Twitter Stock Bounce Back?

Giving a definitive yes or no here is not easy, but it’s possible to make a prediction based on what has been seen so far.

Since mid-May when Twitter hit its lowest point of this latest dip, its stock has successfully managed to rise back up to almost $61 in the weeks since. This is already a pretty impressive bounce back as it is, but its shares show no real signs of trending downward here in the near future.

It’s within $4 of the price it sat at before the dip, and a little more than $15 away from its all-time high of around $77 back in February of 2021.

If Twitter stock continues to bounce back as it’s been trying to do lately, it wouldn’t be unbelievable to see it return to its February spot — especially if it has a promising third and fourth quarter later in 2021.

Is Twitter Stock A Buy?

Because all signs point to continued success for Twitter, now seems as good a time as any to pick up some shares of Twitter — especially while the price per share is down compared to its usual numbers.

As its stock price continues to rise, you have the opportunity to get in at a much lower price than what Twitter stock typically goes for.

Simply put, Twitter stock is a buy right now.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.