Twitter Inc. (TWTR) Is A Short Term Play On High Volatility Levels

Twitter Inc. (NYSE:TWTR) has been on the receiving end in the recent months over what is believed to be an underperformance in a space where there is minimal competition. Despite the uncertainty behind the company’s future prospects in the market, Cantor Fitzgerald managing director, Youssef Squali, remains bullish on the stock. During an interview on CNBC, Squali reiterated that Twitter is more of a trading stock because of its high volatility.

Squali reiterates that the best way to trade Twitter Inc. (NYSE:TWTR) is by buying the stock heading into a big event such as an earnings announcement especially when expectations are highly muted. Product enhancements heading into 2015 are expected to play a bigger role in Twitter improving its margins at the back of ongoing plans to monetize users.

“We think expectations for the quarter are pretty muted so far all the channel checks we’ve had in track order would suggest that the quarter is doing pretty well towards the higher end of expectations. If you look at the top end consensus we’ve selected about an 87% year on year growth,” said Mr. Squali.

The high levels of volatility in the stock according to Squali justifies the stock being traded for short term returns instead of having to hold expectations for long term returns. The high levels of volatility in Twitter Inc. (NYSE:TWTR) have been attributed to the kind of challenges that the social network has been facing in the recent months.

An earlier announcement that Instagram had clocked more than 300 million monthly active users justified concerns that Twitter had stagnated at the 284 million monthly active users. Twitter Inc. (NYSE:TWTR) has also been facing stiff competition from Facebook of which Squali admits and believes the latter remains the better of the two as a long term play going forward.

“Facebook Inc. (NASDAQ:FB) is actually our top pick going into 2015. We like Facebook more than Twitter just to put things in perspective,” said Mr. Squali.

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