Twitter (NYSE:TWTR) stock has been falling in recent days and after it announced the suspension of one of its more prominent users: U.S. President Donald Trump. In just the past week, the stock declined more than 12%. On Friday, it closed at $45.18 – the lowest it's been since late November.
While the company is trying to do its part in controlling the chaos in the United States, the potential fallout from that is that it could lead to less traffic on its platform. Not only is Twitter banning user accounts that it believes are inappropriate for its platform, but that could also alienate their followers and people who don't agree with Twitter's approach. Even leaders in France and Germany, including Chancellor Angela Merkel, are opposed to the company's move to ban Trump.
Trump was an active Twitter user and his tweets sometimes made big news and attracted many responses and a lot of activity overall. The social media company has taken a strong stance against Trump and it could turn out to be a risky move that doesn't pay off over the long run.
The key questions for investors are whether banning Trump will attract more advertisers and if there will be a big drop off in activity levels.
Both of those factors will be key in determining which direction Twitter's numbers will go. And based on the stock's recent movement, investors don't appear to be optimistic that the move will pay off.
In the past year, shares of Twitter are up 36%, outperforming the S&P 500 and its 15% gains over the same period. Its high value and the uncertainty ahead make this a risky stock to put in your portfolio today.
