TWITTER STOCK A BRIGHT SPOT IN A SOUR MARKET RECENTLY

Twitter, Inc. TWTR shares have been in correction mode right along with the broader market, but the severity of the correction in TWTR has been very palatable for those long of the stock. For those not yet long of TWTR, the mild nature of the current pullback in the stock is very enticing indeed. Is the relative strength of TWTR going to persist? Or, will the stock give into the current bout of selling pressure permeating the marketplace right now? What the bulls see in Twitter… • A very strong balance sheet o $2.1 billion in cash vs. $201.67 million in debt o A current ratio of 6.65 o A debt to equity ratio of 6.62% • Explosive revenue and EPS growth estimates for 2015 of 67% and 270% respectively • Very strong technicals in the form of an uptrending stock that just refuses – thus far – to sell-off violently despite the volatile market conditions What the bears see in Twitter… • Very rich valuations o A price-to-earnings of over 140 o A price-to-book of 9.97, and o A price-to-sales of 31.18 o A market capitalization of $28.47 billion that eclipses the company's enterprise value of $31.46 billion • Questions about the company's ability to effectively monetize their massive site traffic Twitter's technicals… Techicians love Twitter's trading action. The stock is sporting an uptrend line well below the current stock price of $51.80 and it appears like it just doesn't want to go down – even as the market has been trading bearishly. Right now, TWTR looks like it is going through a mild correction with a max downside of $46.88. That level represents the Fibonacci projection for what may be an “abc” downside correction as well as the possible point where the stock's uptrend line comes into play. As long as that level holds up, Twitter likely will make another run to the upside before too long. The next major resistance for TWTR comes in at $56.51. Overall… Twitter may certainly drift lower in the short-term – especially if the broader market conditions continue to be difficult. However, the way the stock is trading recently, it would be a very safe bet to assume the bulls will be buying heavily if and when the stock trades down to support at $46.88. This is a classic “buy the dips” candidate if there ever was one.