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Trump attacked Twitter for fact-checks, will it hit the stock?




June 02, 2020, 16:30

While Twitter, and particularly tweets from US President Trump, have been a topic for most of the last 3.5 years of his presidency, recent developments could start to affect the share price of Twitter significantly.

, inviting readers to “get the facts” and linking to a page calling the president’s claims “unsubstantiated.”

As a result, Trump signed an executive order on Thursday which pushes the Federal Communications Commission to set new rules on some websites’ protections under Section 230 of the Communications Decency Act.

Twitter shares suffer after Trump’s executive order

The text of the order on the White House website reads that it aims “to make it that social-media companies that engage in censoring or any political conduct will not be able to keep their liability shield”.

While it seems as if the order is mainly political and tries to deflect from recent and rising criticism in regards to the Trump administration’s response to the Coronavirus pandemic and misses a solid fundament in terms of enforcement, likely facing enormous legal challenges with more and more experts and lawyers expressing doubts that without an act of Congress not much can and will be done (in fact, some already stated that the executive order is unconstitutional), Twitter’s stock nevertheless saw increasing selling pressure.

Twitter shares tumbled more than 10% from their May highs at 34.27 USD, mainly driven by fears in regards to massive legal fees Twitter might potentially face.

In addition to that, Twitter shares have risen nearly 70% from their March lows around 20 USD, making risk-reward ratios for long engagements generally unattractive, at least in our opinion.

And technically the re-test of the SMA(200) will potentially act as a heavier zone of resistance.

How to trade Twitter in this environment?

On H1, the Twitter stock finds itself in a clearly bullish environment with the long sequence staying intact as long as the stock trades above 27.20 USD.

In fact, one could consider the region between 30 and 31 USD a potential Long-trigger.

But while we expect the stock to find support against this region and probably see initially increased demand against this region, we’d like to scale into a Short trade against 32/32.50 USD with a stop above the May highs and aim for a break of the region around 27.00 USD.

If the overall bullish bias in Equities turns, a break of the long-sequence could trigger a new wave of sharp selling, activating a mid-term target around 20 USD and probably even lower:

Source: Admiral Markets MT5 with MT5-SE Add-on #TWTR CFD Hourly chart (between March 20, 2020, to May 29, 2020). Accessed: May 29, 2020, at 10:00pm GMT

Source: Admiral Markets MT5 with MT5-SE Add-on #TWTR CFD Daily chart (between February 4, 2019, to May 29, 2020). Accessed: May 29, 2020, at 10:00 pm GMT – Please note: Past performance is not a reliable indicator of future results or future performance.

In 2015, the value of Twitter Inc. (TWTR) fell by 36.1%, in 2016, it fell by 28.0%, in 2017, it increased by 47.2%, 2018, it increased by 19.4%, 2019, it increased by 13.4%, meaning that after five years, it was down by 11.5%.

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Disclaimer: The given data provides additional information regarding all analyses, estimates, prognosis, forecasts, or other similar assessments or information (hereinafter “Analysis”) published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:

  1. This is a marketing communication. The analysis is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
  2. Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.
  3. Each of the Analyses is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter “Author”) based on the Author’s personal estimations.
  4. To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for the prevention and management of conflicts of interest.
  5. Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures refer to any past performance is not a reliable indicator of future results.
  6. The contents of the Analysis should not be construed as an express or implied promise, guarantee or implication by Admiral Markets that the client shall profit from the strategies herein or that losses in connection therewith mayor shall be limited.
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