Back in late January, market players were growing optimistic that Twitter (TWTR) might be ready to join the FAANG names. It finally overcame some of the constant criticism of its management and and posted solid numbers. Technically it broke out of a 4-year long downtrend on the good news.
Valuation was still aggressive and that resulted in some analyst downgrades, but momentum buyers that are focused on price action rather than financial statements where giving the stock a good push. In addition, Twitter is often mentioned as potential takeover candidate.
Andrew Left of Citron piled on yesterday with a short recommendation that was focused on the fact that Twitter "licenses" its data and that it may add up to 80% of its total profits. This use of data as a revenue source is nothing new but in the current environment it sent TWTR into a freefall.
The stock has now fallen into the gap that was created by the strong earnings news in February. This morning the stock has come within a few cents of "filling the gap" which seems to have triggered some buying interest.
The big issue here is whether this data privacy issue is going to continue to expand. If it blows over than TWTR looks like an attractive buy here with support around $27.35.
Overall the market seems to be slowly finding some support and a number of stocks that were badly punished are inching back. Dip buyers are obviously gun shy but they are starting to sniff out some values and putting money to work.