After sliding from a high near $70 in December of 2013 to a price of $32.20, investors who were sold the hot tech high flyer may have been exiting the past few months with a case of whiplash. But is now the opportunity to buy? Some hedge funds may thinks so, and they are picking a bottom.
Twitter’s stock up on high recent volume
Twitter Inc (NYSE:TWTR) was up nearly 1% on Thursday following heavy recent buying. The day before the stock bottomed on May 6, volume spiked in a pattern similar to the December 26 top, when sellers began exiting the stock with superb timing. Volume spikes are sometimes a sign of hedge fund accumulation. Could hedge funds be buying at the bottom?
As rumors make the rounds that hedge funds are attempting to pick a bottom in the stock, and with Twitter Inc (NYSE:TWTR) trading outside a typical band of standard deviation that some quantitative hedge funds watch, the move in the stock price could be fundamental as well.
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Buy rating as volume spikes
Last week SunTrust’s Robert Peck upped the rating on the stock from “neutral” to “buy,” just as the bulk of the buying in Twitter Inc (NYSE:TWTR) was under way. Peck believes Twitter is a platform similar to Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), Facebook Inc (NASDAQ:FB) and LinkedIn Corp (NYSE:LNKD) that will endure, saying the firm has a “a long runway in its core business.”
Twitter has become a news feed of sorts and is populated by a professional audience of media, technology and financial elite, but has not grasp the mainstream audience that Facebook, for instance, attracts. The entire technology segment had come under fire recently, with once high flying tech stocks now in the doghouse as large-cap establishment names, as measured by the Dow Jones Industrial Average and Standard and Poor’s 500 indexes, reaching all time highs.
With the upgrade, Peck also called for a $45 price target in the stock alongside a multiple of 13 times 2015 revenue estimates, up from its current 9 times multiple of earnings.
When comparing Facebook to Twitter, Peck says it’s not apples to apples, noting that Twitter Inc (NYSE:TWTR) can work as an investment even though it doesn’t reach the widespread mass popularity of Facebook Inc (NASDAQ:FB).