I’ve never been able to figure out Twitter’s appeal, other than to those who want to keep up with the Kardashians, Justin Bieber, Rihanna and other A-list narcissists. Investors would seem to back me up on this, since the stock has been falling for nearly two years — from an all-time high near $75 to a bear market low in August of $21. Lately, however, bulls have had a resurgence, aided by a PR blitz that included some nicely timed headlines. For one, the company plans to lay off 8% of its employees. That kind of stuff is always guaranteed to get investors high-fiving on Wall Street. Also, Jack Dorsey, one of Twitter’s four co-founders, has been re-installed as CEO in a desperate attempt to turn things around. The company has yet to make a profit, not that that’s ever a concern on Sand Hill Road, but maybe Dorsey can pull a “Yahoo” and find a venture-stage acquisition to pump up Twitter’s bottom line? The most recent news, however, could turn out to be the kiss of death: Steve Ballmer owns a 4% stake in Twitter. Given Ballmer’s dismal track record for acquisitions while CEO of Microsoft, Twitter might as well have the boardroom backing of Nicholas Cage or Wesley Snipes.
As you might expect, Wall Street’s hypemeisters, working hand-in-hand with the usual suck-ups and ninnies in the news media, have leveraged the Ballmer story to drive short-covering that has pushed TWTR 30% higher in the last two weeks. These guys are so good they could move $500,000 condos in Syria. So how far will Twitter’s gaseous ascent go before the stock resumes its fall to the 18.26 target shown? My corrective-rally target is 36.00, assuming TWTR can get past a ‘Hidden Pivot midpoint resistance’ at 32.42. The stock would become a buy at that point, but with the goal of plowing one’s gains back into a short position, generously stopped, from $36. Twitter’s surge to those heights would amount to a 71% gain off the August low. For the keister bandits who will have stage managed the move, it would be a fine piece of work — the transformation of the proverbial sow’s ear into a million silk purses. _______ UPDATE (January 14, 9:55 a.m. EST): Twitter is plummeting this morning, having crashed the 18.26 target. Next stop, perhaps on the way to zero, is 14.06, a target that comes from the weekly chart, where A= 38.82 on 7/17. Based on personal experience with Twitter, I’ve always thought this stock had the potential to go to zero. Twitter may work for Justin Bieber and his fans, but not for businesses that want to grow._______ UPDATE (January 20, 10:42 p.m.): DaBoyz got a grip on bears’ cahones today and short-squeezed the stock for all it was worth. It won’t prevent the stock from falling toward well-deserved oblivion, however. In the meantime, the 14.06 target will remain valid unless the con-men who are TWTR’s loyal sponsors can goose it to…$32.