If you ever want to know how the market feels about a particular company, the stock's short interest movement can often serve as your best gauge. Short interest offers a sense of how pessimistic, or "bearish," investors are about a company over a certain time period. 

In the case of Twitter, Inc. (TWTR), the embattled San Fransisco-based company saw its short interest position decline 21%. As of the most recent settlement date, the social media giant had only 53.26 million shares sold short. The word "only" is included here because, while its short interest is still relatively high, especially compared with Facebook, Inc.'s (FB) 24.78 million, Twitter's bearish total is still down from 67.66 million shares two weeks ago. (See also: Twitter's Anthony Noto Gets Pay Raise.)

Investors, or in this case short sellers, who believe the price of a stock will fall can seek to profit from that decline by betting money on that belief. They can borrow the shares, hoping to sell them once the share price falls or before they have to purchase or replace the shares. That collective belief is then measured and calculated in the short interest total, which is reported bi-weekly.

In the case of Twitter, the decline in short interest likely reflects the belief that the stock has been punished enough. Since Oct. 5, Twitter stock has fallen as much as 35.5% from a high of $25.24 to around $16. During that span, several potential M&A suitors such as Salesforce.com, Inc. (CRM) and The Walt Disney Company (DIS) bowed out of contention, citing the pervasive bullying and hate speech that occurs on Twitter's platform. (See also: Twitter Cracks Down on Hate Speech on Its Platform.)

While an increasing or declining level of short interest doesn't automatically indicate that a company's share price is ready to rise or fall, it does offer a sense of how the market or "the herd" feels about a company. Investors can then decide to follow the grain or move against it. (See also: Short Interest: What It Tells Us.)

Twitter shares closed Monday at $18.30, up 1.33%. The shares have declined 21% year to date, compared with a 7.72% rise in the S&P 500 (SPX) index.

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