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22.01.2021 01:24 PM
Twitter stock shows worst dynamics in S&P 500

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Twitter shares are showing the worst dynamics relative to other components of the broad S&P 500 index. Here, the company's securities have plummeted by a significant 10% or more since the beginning of 2021, while the S&P 500 index has increased by 2.5%. It can be noted that the current Twitter shares are trading at $47.13, which is just 4% higher than the initial trading price on the day of the IPO, namely in November 2013.

Apparently, investors did not like how the account of the 45th US President Donald Trump was blocked by Twitter's management as a response to the Capitol attack on January 6. Such drastic actions on the part of the company's management are absolutely likely to worsen its short-term prospects. Moreover, there is not enough time left to show really good financial results in the current year.

Experts of the leading analytical company Argus Research predict that such solutions of Twitter will deprive the social network of several million active users. In turn, Congress is likely to continue the fight against monopolies in the light of these developments.

In fact, Twitter is not the only social network that blocked Donald Trump's account. However, it was its shares that sharply declined in this context. In comparison, Facebook shares only plummeted by just 2% in January, while Snap increased by 4%, and Pinterest by 10%.

The blocking of the account of the former US president was not something exclusive to Twitter's CEO. Before this issue emerged, the company began to cleanse its social network from various "fake and suspicious" users. This operation began back in October, when Twitter executives suggested that Russia was using the social network to interfere in the 2016 presidential election. However, the scale of blocking different accounts has recently turned out to be truly frightening, which is why the market could not help but react to it. The Washington Post said that around 70 million accounts were blocked over the past two months, which is almost 20% of the total number of Twitter users. Thus, the decision to block Trump only added negativity and increased outrage. As a result, the company's shares sharply fell.

Nevertheless, it is noteworthy that the value of Twitter shares gained 6.8% last week, due to Wells Fargo's analyst Peter Stabler, who highly praised the social network's management for improving monetization efficiency and for successfully integrating video content. Unfortunately, this market optimism associated with the positive review, subsided. The reason lies in the current sweep of the social network, which showed an incredibly large number of accounts that do not represent commercial value. Given this, it becomes clear that the nearest prospects for monetization are not so rosy.

Andreeva Natalya,
Pakar analisis InstaForex
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