Twitter Short Interest Surges by 8 Million Shares

By Douglas A. McIntyre Updated Jan 11, 3:45PM EST · Published Oct 28, 7:33AM EDT

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Twitter Short Interest Surges by 8 Million Shares — © hocus-focus / Getty Images

Twitter Inc. (NYSE: TWTR) posted impressive earnings recently. However, a large group of investors continued to bet that pessimism about the company will drag the shares down. The short interest in Twitter rose 8.5 million shares to 53 million in the period which ended October 15.

Revenue for the most recent quarter reached $758 million, up 29%. However, Average monthly users in Q3 were 326 million, a decrease of 4 million year-over-year and a decrease of 9 million quarter-over-quarter. Twitter has weeded out accounts which it calls a reduction for “health reasons”, a means to keep fake or hate accounts in check. Investors clearly did not mind this, or the fact it may continue.

The company said in its earnings release:

Looking ahead, we expect to see a sequential decline in MAU in Q4 given our ongoing health work, decisions not to renew or move to paid SMS carrier relationships in certain markets, and our decision to allocate resources towards GDPR and health. Based on our current level of visibility, we expect the decline to be mid-single-digit millions of MAU. As a reminder, DAU growth continues to be the best measure of our success in driving the use of Twitter as a daily utility.

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Twitter’s shares rose 15% on the earnings news which also included mention of new agreements with major companies like Adidas and Activision Blizzard. These, however, were not enough to move the shares anywhere near their 52-week high of $47.79. Twitter shares closed the week at $32.36. This also means shares are down 22% over the last five years against an advance of 82% by the S&P 500 and 205% by larger rival Facebook Inc. (NASDAQ: FB)

Twitter’s shares were upgraded by several analysts after earnings, but a large number of investors persist in their willingness to believe things will get worse.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.