Reportedly, Twitter Inc. (TWTR) CEO Jack Dorsey has bought around 426,000 shares worth $7 million of the company this Valentine's day. The founder director tweeted the news with the hashtag “#Love Twitter” from his account. The news led to an upside in Twitter’s share price.
Notably, Twitter’s shares have largely underperformed the broader market. The company has been witnessing sluggish user expansion and revenues have grown just 1% year over year in the recently reported quarter. We note that Dorsey’s strategy of focusing on live and user friendly changes have not generated the desired results for Twitter.
Amid the exodus of top level executives and poor quarterly results, the latest development has managed to generate considerable momentum for the company and rekindle investors’ interest.
Previously, Dorsey had gained around $11 million by selling his shares in Square Inc. The move to buy Twitter shares can be seen as Dorsey’s effort to reassure dismayed investors who have been on the edge given its unabated troubles. Generally it is said that when a founder buys shares of his own company, it implies that the stock has much upside potential.
Dorsey has often been widely criticized for playing the dual responsibilities of heading both Twitter and Square, especially when both the companies are at crucial junctures. Dorsey was quoted by media reports saying "My intention is to serve both companies in every way I know how and make sure that we are really focused on what’s most important for each."
Last year, rumors about Twitter’s probable sale did the rounds. Big names like Alphabet GOOGL and The Walt Disney Company DIS were speculated to have shown interest in buying the micro blogging site. But there was a twist in its ‘takeover’ tale with most bidders pulling out of the race. Reportedly, profitability issues, stagnant user growth and infamous trolling incidents did not do much justice to the estimated bid price of $16 to $20 billion.
Zacks Rank & Stock Movement
At present, Twitter has a Zacks Rank #3 (Hold). We note that Twitter has vastly underperformed the Zacks categorized Internet Software industry inthe last one year. The company’s shares increased 0.98% compared with the industry’s gain of 23.18% during that period.
A better-ranked stock in the wider technology space is Oclaro Inc. OCLR, which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the trailing four quarters, Oclaro recorded a positive average earnings surprise of 75.00%.
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