Twitter, Inc. (TWTR) shares fell about 4% during Thursday's session after MoffettNathanson analyst Michael Nathanson lowered his price target from $28.00 to $25.00 per share. The analyst cited a combination of slowing revenue growth and rising cost growth as catalysts for a weak second quarter financial report in late July.
The lower price target comes about a month after the company's first quarter financial results, where it showed year-over-year monetizable daily user grow returning to the double digits for the first time since the second quarter of 2018. On its conference call, Twitter management also reiterated that the social media network remains focused on removing abusing content.
The company also announced that it is continuing to launch new innovations through its "twttr" prototype app, which enables Twitter to try out new ideas outside of its public network, gain feedback from testers, and develop new features based on what it learns. In particular, the new app is focused on testing new designs for conversations, and advertisers have responded positively to the results.
From a technical standpoint, the stock broke down from the 50-day moving average following the analyst commentary. The relative strength index (RSI) moved slightly lower to neutral levels of 44.20, while the moving average convergence divergence (MACD) continues to trend sideways. These indicators provide few hints of where the stock could be headed, but the falling wedge pattern suggests a bearish outlook.
Traders should watch for a move to trendline support at around $35.35 or the 200-day moving average at $32.89. If the stock breaks down from those levels, it could retest prior lows of around $29.50 made back in March. If the stock rebounds from these support levels, traders should watch for a move toward trendline resistance at around $38.30.
The author holds no position in the stock(s) mentioned except through passively managed index funds.