Investing

Short Interest in Twitter Falls

Douglas A. McIntyre

Published: June 10, 2016 7:00 am

Last Updated: January 13, 2020 6:59 am

The short interest in Twitter Inc. (NYSE: TWTR) fell 8% in the period that ended on May 31 to 71.3 million shares. Perhaps rumors of a sale drove some shorts out, given Twitter’s management turmoil and battered share price.

Over the past month, Twitter’s stock has been flat. It rallied a bit last week, perhaps as the rumors hit the media. Two pieces of news also affected the stock.

The San Jose Mercury News reported:

“We want to underscore that we do not think the company is up for sale in the near term,” wrote Bob Peck, an analyst at SunTrust Robinson Humphrey. “However we believe that if current trends persist, Twitter would be a top candidate in 2017.” Google, Facebook, Apple and traditional media companies are the most likely buyers, he wrote.

Not all the evaluations are positive. According to Reuters:

Advertising agencies are for the first time turning to Instagram more frequently than Twitter for social media ad campaigns, a survey released Thursday showed, a further indication of weakness in an ad sales operation that has been one of the few bright spots for Twitter.

On a more positive note, Capital Market Laboratories reported:

The newly introduced Twitter Carousel made use of tweets in and of themselves. This new platform is data driven, one of Twitter’s revenue sources that, although it has grown quickly, is still tiny compared to its overall revenue base.

But the data analytics side of Twitter has the potential to be enormous, and at some point, it could make up a substantial portion of Twitter’s revenue. Beautifully, Twitter data can only be found on Twitter. There will be no Snapchat data product or Facebook friend-voyeurism data product.

Much of the news that moves Twitter’s stock price up and down should not have an effect. However, the shares exhibit a volatility that is not normal in other widely traded stocks.