Shares of Twitter erupted 15% higher yesterday after the company reported higher-than-expected revenue for the fourth-quarter. Yesterday’s high of $39.64 is the highest the stock has traded since October last year.
Fundamental analysis: Biggest quarterly user growth ever
The social media giant reported earnings of $0.25 per share, which fell short of analysts’ estimates of $0.29 cents expected. However, the revenue surpassed the $1 billion mark after the company revealed it generated $1.01 billion in revenues compared to the market expectations of $996.7 million.
The Monetizable Daily Active Users (mDAUs) number was reported at 152 million, which is higher than the estimates of 147.5 million, which again, is an increase of 21% and the fastest quarterly growth ever for the company.
Accordingly, this number measures “users who log in and access Twitter on any given day through Twitter.com or our Twitter applications that are able to show ads.”
“When you add 26 million people to the service, when more than half of it is tied directly to product improvements, you build a confidence to continue to execute against your strategy and the execution we’ve been able to deliver over the last few years,” said CFO Ned Segal.
Segal also confirmed that the company has made progress on tackling the issues with its Mobile Application Promotion (MAP) product, which sent the company’s shares down in October last year.
“We’ve got more work to do on the revenue product side as well,” added Segal.
Looking forward, Twitter said it expects between $825 million and $885 million in revenues for the first quarter, in line with the consensus estimate of $873 million.
Technical analysis: Shares close 15% higher
Twitter stock price gapped more than 9% yesterday on better-than-expected results. At one point, the stock was trading 18% higher compared to the prior day’s closing price. A high of $39.64 is the highest the stock has traded since October last year.
Yesterday’s move higher has brought the price action to a short-term resistance around the $39 handle. For the next week, the key resistance is located at $45, where the down-slipping trend line that connects two previous highs is located.
On the downside, the price is supported by the 100-DMA at $36.54. We expect the price action to continue marching higher in the coming days and weeks as investors will be looking to buy Twitter stock amid positive momentum.
Shares of Twitter hit the highest levels in 4 months on the back on the better-than-expected revenue and active daily user numbers. The bulls are likely to target the $45 handle next, which will act as a key resistance in the coming weeks.