When Twitter (NYSE:TWTR) blocked Donald Trump’s account, the stock soared weeks later because of a strong quarterly report. Last Friday, the story changed. Investors should get out of the stock.
In Q1, Twitter posted costs moderating to $984 million, up by only 21%. Revenue outpaced costs, rising by 29% to $1.04 billion. For Q2, revenue is below consensus at $980 million to $1.08 billion. Worse is that it expects a GAAP operating loss of $170 million to $120 million.
Recall that Twitter decided to selectively sensor users and ban the former President of the United States. This will prove a turning point. It lost millions of users afterward. The site will become a slogan of "go woke, go broke."
In hindsight, Twitter will learn that it should not have interfered with free speech. Users would not have left the platform and advertising revenue would not slow. Now, the damage is probably permanent.
The Twitter audience has many alternative sites. This includes Facebook (NASDAQ:FB), which posted strong results, Instagram, Snapchat (NYSE:SNAP), and Pinterest (NYSE:PINS).
Your Takeaway
Avoid Twitter. The downtrend is in the early innings and will accelerate as the NASDAQ weakens in the coming months.
