Twitter Stock Rallies a Ridiculous 16% – Here’s Why You Should Sell

Twitter stock surged an unbelievable 16% on Tuesday. It's probably time to dump your TWTR shares. | Source: AP Photo / Richard Drew

By Twitter stock (TWTR) surged 16% Tuesday on mammoth first-quarter earnings and massive user growth. The company posted $191 million in net income or 25 cents a share. That’s a 213% increase from the $61 million in net income the company achieved in Q1 2018.

The platform also saw a tsunami of new monthly active users (MAUs) since January. With 9 million new users over the period, Twitter destroyed expectations of a 4 million MAU decline.

Twitter stock jumped nearly 16% after it smashed earnings expectations. | Source: Yahoo Finance

This is the last time Twitter will be reporting its monthly active user base for the quarter. From now on, the social media company will only report “daily active users.” The goal is to give investors a better sense of Twitter’s monetizable monthly user base.

A Good Time To Sell Twitter Stock

Twitter’s first-quarter earnings and user growth were wildly unexpected. These numbers represent a surprise aberration from Twitter’s own expected future growth.

Its long-term revenue outlook remains as weak as it was this Spring. Any user growth at all, much less robust user growth as unsustainable as last quarter, is not in the cards. And Twitter expects its operating costs to rise by 20% in 2019.

Value investors looking to buy and hold equities as part of a long term savings portfolio, but who like to do some managing that falls short of day trading, may do well to cash in on this week’s news by letting go some of their Twitter stock.

Day traders who make a profit from the daily rise and fall of various securities might take this opportunity to unload Twitter for some cash and buy it back when the market cools down.

Where Is Twitter Stock Headed Next?

Although it is unlikely to repeat its quarter one performance any time soon, Twitter is a powerful global brand and highly utilized platform with a reliable team at the helm.

Its long-term prospects are as great as or better than the rest of the U.S. equities market as a whole. (Though all of it is likely overpriced in this year’s feverish stock market.)

Twitter will focus its future efforts on improving the health of the conversation on its platform. That’s a cause very near and dear to the heart of Twitter’s founder and CEO Jack Dorsey, but overbearing censorship could also trigger a punishing user exodus.

Remember, it wasn’t that long ago that TWTR shareholders dumped the stock on absolutely abysmal user stats.

Last modified: March 4, 2021 2:44 PM

W. E. Messamore: Markets Contributor for CCN living in Nashville, Tennessee. Bachelor of Business Administration from Belmont University in 2009 (majored in Entrepreneurship). Organized Senator Rand Paul's first and second online fundraisers in 2009. Roving editor for the Independent Voter Network since 2013. Email me | Link up with me on LinkedIn | Follow Me on Twitter (followed by: fmr Rep. Ron Paul (R-TX), Sen. Rand Paul (R-KY), fmr NM Gov. Gary Johnson, and Rep. Thomas Massie (R-KY))