Goodbye Jack Dorsey: Is now a good time to buy Twitter shares?

Newly announced, Twitter co-founder Jack Dorsey has given up his position as chief executive. The change became effective instantly when it was first announced yesterday. Now, the question is, is Twitter stock available to buy? 

Parag Agrawal, who’s the new CEO of the social media platform, and has been with Twitter for more than a decade, having served as the chief technology officer since 2017. Jack Dorsey worked as the CEO for the last eighteen years, and will remain a board member until his term ceases at the 2022 meeting of stockholders. 

Dorsey said in written remarks with the Twitter announcement, “I’ve decided to leave Twitter because I believe the company is ready to move on from its founders. My trust in Parag as Twitter’s CEO is deep. His work over the past ten years has been transformational. I’m deeply grateful for his skill, heart and soul. It’s his time to lead.”

Baird analyst Colin Sebastian wrote to clients, “We think appointing a technology leader as CEO makes a lot of sense. Twitter is competing in a market where the ‘winners’ are engineering-oriented companies that are nimble, take risks, and prioritize technology over marketing.”

When rumors of the new deal first came to light, the Twitter stock jumped sharply in premarket trading. Is now a good time to buy Twitter shares?

221 million users

If you’re considering buying Twitter shares, also consider the following:

Twitter has reached 221 million users in the quarter, up thirteen percent and accelerating from eleven percent growth in the second quarter. Twitter said, “Ongoing product improvements and global conversation around current events,” paved the way for acceleration. 

Twitter was founded back in 2006, and is now a global platform for public self-expression, and hosting conversations in real time. The social networking platforms allow their users to post and interact with messages known as “tweets”. Their competitors are Facebook along with re-emergent Snap. 

Many people utilize Twitter as a marketing tool for business including live events, involving breaking news, sports and entertainment. 

Ned Segal, Twitter’s chief financial officer commented on the results stating, “We continued to drive increased value for our advertisers thanks to revenue product innovation, including progress on our brand and direct response offerings, strong sales execution and a broad increase in advertiser demand.”

Twitter stock

As the foundation of the decision to buy Twitter shares, people are curious about the company’s stock. According to the IBD Stock Checkup, Twitter holds a weak IBD Composite Rating of twenty-four out of a highest-possible ninety-nine. When using growth stocks for the greatest potential gains based on the CAN SLIM investment paradigm, focus on those with a Composite Rating of ninety or greater.

Among other IBD ratings, Twitter has a weak Relative Strength rating as well, of merely fourteen. It means that Twitter stock currently outperforms just fourteen percent of all stocks amongst the IBD database. That’s over the past year. Preferably, you want to look for stocks showing a rating of eighty or higher. 

It’s a negative signal for anyone looking to buy Twitter shares. According to Investors, “A stock’s relative strength line compares the stock’s daily price performance to the S&P 500. An upward-sloping RS line means the stock is outperforming the S&P 500. A downward-sloping line indicates the stock is lagging the S&P 500.”

Twitter’s Accumulation/Distribution Rating is E. This particular rating explores price and volume changes in a stock over the past thirteen weeks of trading. A grade of A+ indicates heavy institutional buying. The lowest rating of E means heavy selling. The C grade is neutral. 

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It’s not a wise idea at this point but do you think it will be in the near future? Share your thoughts in the comments below!