Login

[3 Must-See Charts] Twitter’s Profitable Purge

Tech stocks continue to dominate the market.

The Nasdaq Composite gained an impressive 1.4% in Thursday trade. The tech-heavy index led the major averages by a mile to post new all-time closing highs. Life is good in Silicon Valley…

Today, we’re breaking down three popular tech names making the biggest headlines this week.

Will these stocks continue their march to new highs this summer?

Let’s go to the charts to find out…

1. A Netflix downgrade can’t rattle the stock

Netflix Inc. (NADSAQ:NFLX) was on the receiving end of a confusing downgrade this week courtesy of USB.

A USB analyst lowered his rating on the stock to neutral, claiming all the good news and growth surrounding the company is all priced in.

Fair enough. After all, Netflix shares have more than doubled this year. It’s not hard to see how someone could look at this chart and assume that the stock’s best days are behind it…

Unstoppable

However, we were also treated to a fun little surprise to go along with the Netflix downgrade: a price target increase.

The same analyst who downgraded the stock raised his price target for NFLX to $425 from $375.

That’s a tricky move. But this is, after all, a bull market. In reality, stocks that many analysts and investors believe are “priced to perfection” keep getting more expensive by the day…

2. Twitter’s shakeup rattles investors

Twitter Inc. (NYSE:TWTR) traders endured a brief moment of insanity earlier this week as the stock sold off following a purge of fake accounts.

Management has been working on ways to combat abuse and spam. This week, the company announced it was terminating the accounts of suspected bots and other scammers.

But the Twitter purge does have its consequences. For one, power users probably lost a lot of followers (For instance, Twitter CEO Jack Dorsey said he lost a whopping 200,000 followers).

The move prompted heavy selling Monday morning. Twitter stock dropped 8% as investors and analysts worried how the move would hurt the site’s number of monthly active users — an important social media metric.

But these fears evaporated later this week and the stock recovered. It remains in consolidation move after a powerful two-month run that launched the stock to new 2018 highs.

twitter

Ultimately, the purge is an important long-term step to end abuse and spamming on Twitter and give the company a shot to continue to grow its platform and compete with Facebook…

3. Prime Day Cleans Up

Shares of Amazon.com (NASDAQ:AMZN) jumped more than 2% yesterday to close at new all-time highs. The stock has remained locked in one of the market’s strongest uptrends so far this year, never straying from its highs for more than a few weeks at a time.

If you find yourself asking why investors will seemingly pay almost any price for this stock, let me remind you that Prime Day is quickly approaching.

Prime Day isn’t just Amazon’s holiest holiday. It’s quickly become one of the company’s biggest cash cows.

In just three years, Prime Day revenue has jumped from $900 million to $2.41 billion.

prime day

“Perhaps even more telling is the speed at which customers are signing up for Prime memberships,” The Street notes. “The number of Prime members is projected to hit 107 million members by the end of 2018. And Amazon’s paid subscription model is really paying off: Prime members are spending an average of $2,846/year, compared to just $544/year for non-members.”

Feel free to quote these gaudy numbers the next time someone tries to tell you Amazon stock is too expensive

Sincerely,

Greg Guenthner

You May Also Be Interested In:

Greg Guenthner

Greg Guenthner, CMT, is the editor of Rude Awakening PRO, The Seven Figure Formula and Seven Figure Signals. Over the past decade, Greg has helped build the small-cap and technical research teams. His analysis has appeared in Forbes, Yahoo Finance, Bankrate, and countless other publications. Greg is a member of the CMT Association...

View More By Greg Guenthner