During the recent trading sessions stock of Twitter, Inc. (NYSE:TWTR) was gathering the crowd in the stock market. It is widely believed that a stock’s future performance can best be predicted by analyzing prior trends and patterns in price. In the case of TWTR, the chart has some interesting things to say about where the stock might be headed in the future.
How has the stock performed recently?
Twitter, Inc. (NYSE:TWTR) in the last month has increased +10.39%. Shares are now up over the past year, outperforming the broad market by -100% and outperformed a peer group of similar companies by 15%. After the latest session, which saw the stock close at a price of $22.42, TWTR sits below its 52-week high. Twitter, Inc. (NYSE:TWTR) has been trading in a bullish manner, based on the relative positions of the stock’s 20 and 200 day moving averages.
Of course, these surface-level price movements don’t tell us much about the direction that TWTR may be headed in the future. To do this, analysts often study the speed and magnitude of a stock’s price movements with what are known as momentum indicators. The logic is that as a stock’s momentum slows, it may be nearing key support or resistance levels and possibly the end of a current trend. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for TWTR is 69.23%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 96.90%, tells a different story, and suggests that TWTR currently trades in overbought territory.
What do the trading volumes reveal?
Volume patterns can also be useful for predicting future performance. When trading activity is abnormally high, it’s often a sign that the market feels particularly strong in one way or another about the future direction of a stock. Twitter, Inc. (TWTR) average trading volume of 20,828,590 during the past month is 20.57% above its average volume over the past year, indicating that investors have been more active than usual in the stock in recent times.
What do the analysts think?
TWTR is currently overvalued by 20.54% relative to the average 1-year price target of $18.60 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 3.20, which implies that analysts are generally neutral in their outlook for TWTR over the next year.
How risky is the stock?
When analyzing a stock’s price performance, it’s essential to take risk into account. Beta, which measures a stock’s volatility relative to the overall market, can be used to gauge the level of systematic risk associated with a particular stock.
Twitter, Inc. (NYSE:TWTR) has a beta of 1.11, compared to a beta of 1 for the market, which implies that the stock’s price movements are more extreme than the market as a whole. TWTR therefore has a above average level of market risk. During the past couple of weeks, TWTR average daily volatility was 24.32%, which is 23.54 percentage points lower than the average volatility over the past 100 days.