Twitter is one of the world's largest social networks. Unfortunately however, the company's stock is dying because of one major problem. For some reason, Twitter hasn't been able to bring in the new visitors and retain them as regular members. Data from their most recent earnings reports show that the user growth seems to have plateaued. Because more users mean more dollars, investors aren't happy. As a result, they've been pushing for the resignation of the company's CEO Dick Costolo; and late last week, we found out that the pressure proved to pay off. Dick Costolo will be resigning. So today, we'll talk about the trends we've seen since Costolo's resignation announcement, and the opportunities we can expect to see moving forward from Twitter stock. So, let's get right to it.
What We've Seen Since Dick Costolo's Resignation
The market hasn't shown much improvement for the stock after the resignation. While there was an 8% after hours jump the day of the announcement. We've seen all downtrends from there; suggesting that TWTR is likely to follow the same technical path we've seen for more than a month now. However, there are a few things that are likely to prove to be catalysts for the stock if done properly. With that said, for now, it's going to be a good idea to continue trading put options while the downtrend persists. However, you're going to want to keep an eye out for catalysts that will make call options profitable.
Possible Catalysts Coming Down The Road
As mentioned above, TWTR is trending down at the moment. However, there are a few possible catalysts down the road that could send this one into bull mode. Here's what you'll want to look for.
Official Resignation – While Dick Costolo has officially announced that he will be resigning from his post as CEO. That resignation hasn't happened quite yet. In fact, Costolo isn't expected to step down until July 1st. With that said, when the official resignation happens, investors will most likely be excited for Twitter's future. So, look for a rally during trading on July 1st and possibly for days to follow.
New CEO Addition – Twitter hasn't found a CEO to replace Costolo yet. However, considering the size and value of the company; the person they charge with the role as CEO is likely to be incredibly talented. So, when Twitter announces who Costolo's replacement is, we can expect to see another rally as investors get excited about what the new CEO has to bring to the table.
New CEO's Results – Finally, a new CEO may or may not solve the problem. Nonetheless, when the results under the new CEO come out, we're likely to see big movement from the stock. With that considered, once a new CEO is chosen, the next big catalyst for the stock is likely going to be the new CEO's first earnings report. If he can show under his guidance that Twitter's user problem is starting to find a cure, we can expect to see a rally to the likes of something TWTR has never seen before.
So, trading Twitter options at the moment is a relatively simple process. Based on what we've seen, we know that the stock is likely to continue falling at the slow and steady pace we've seen over the past month and a half. From there, there are a few catalysts that are likely to send the stock up. Trading puts for now and calls on the catalysts is likely going to be a very profitable strategy.
What Do You Think?
Where do you think TWTR is headed next and why? Let us know in the comments below!