Twitter Inc (NYSE:TWTR) had a pretty disappointing 2014, with stock prices dropping by more than 40% in the year. But the company is doing very well in the New Year with share prices going up by around 10%. Many shareholders and investors are trying to get out of this stock, but many feel that this is time to invest in weakness as the stock might plunge up again. Option Action trader Dan Nathan feels that Carl Icahn should reconsider Twitter Inc (NYSE:TWTR) stock and he shared his options play to make money on this stock on CNBC.
Nathan pointed out that after a disastrous 2014, Twitter Inc (NYSE:TWTR) had a pretty decent 2015 so far with share prices going up by around 10%. He feels that this uptrend in 2015 might be due to a lot of rumors by big names like Google Inc (NASDAQ:GOOGL) and Yahoo! Inc. (NASDAQ:YHOO). He pointed at Icahn’s statement about Twitter Inc (NYSE:TWTR) stock that he feels a little mad about the stock.
Nathan said that this is a relatively new stock and has completed just more than a year as a public company. He mentioned that many doesn’t like the management of Twitter Inc (NYSE:TWTR), but he added that this company has a unique social media platform and property and their brand is very popular among people. He said that investor activists like Carl Icahn could get involved with Twitter Inc (NYSE:TWTR) and may be push Dick Costolo out of it. Nathan feels that one biggest reason to buy this stock is the potential behind this company being acquired, with a lot of rumors floating around.
Nathan said that Twitter Inc (NYSE:TWTR) has a market cap of $25 billion and Facebook Inc (NASDAQ:FB) acquired Whatsapp for $22 billion, which crosses 700 million MAU’s now. He added that Twitter Inc (NYSE:TWTR) has only 300 million MAU’s, but he said that this is not just a mobile messaging app, but a very interesting social media platform with a huge potential. He feels that Twitter Inc (NYSE:TWTR) is a massively undervalued property. He said that Twitter Inc (NYSE:TWTR) can have a synergy with a big tech name and he thinks that the big tech name could be Google Inc (NASDAQ:GOOGL). He also shared his options play for Twitter Inc (NYSE:TWTR) stock.
“This was the range coming in into the year, between $40 and $30. This was the low back in May after their IPO lockup. I really wanted to catch it in the mid-30s, possibly below 30s. That didn’t happen. So I bought it yesterday (Thursday) at $37.5. […] One of the thing I would do is make use of that high implied volatility. Today (Friday) when the stock was at $40 you could look out to March and you can sell March 35 Put […] at $1.80 and you could buy March 45 call for $2.10. That cost you 30 cents and your risk is really below $35, you are losing 1 for 1 and between $45 and $35 you could lose that 30 cents and you have this massive upside potential above $45,” Nathan said.
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