One of the world’s premier social media companies, Twitter Inc TWTR 18.18%, had one of the oddest earnings days ever on Tuesday, as news of the company’s disappointing Q1 performance leaked early. For traders wondering how to trade the stock on the day after earnin gs, here’s a breakdown of how Twitter’s stock has reacted to earnings since the company first went public back in late 2013.
Bumpy Ride
“Bumpy” is perhaps the best way to describe Twitter’s trading pattern up to this point. Early investors were initially thrilled when Twitter’s stock soared more than 60 percent in its first couple of months.
However, by late spring 2014, early Twitter investors were down by more than 30 percent. Over the past year or so, Twitter shares have traded in a massive range between around $35 per share and $55 per share.
The Numbers
Given Twitter’s volatile share price history, it’s no surprise that Twitter’s stock has seen volatile reactions to earnings as well. So far, Twitter has averaged a more than 15.7 percent move on the day following its earnings reports.
Unfortunately for traders, while the magnitude of Twitter’s moves has been huge, the direction of the move has been hard to predict prior to earnings. In fact, the stock is averaging only a -1.24 percent overall return on the day following earnings.
More Earnings Facts
Twitter’s last four reports have alternated between good and bad for Twitter shareholders, with the most recent report resulting in a 16.4 percent gain for the stock on the day after earnings. Early indications are that the pattern will likely continue this quarter, with Twitter shares down sharply in late trading on Tuesday.
Twitter’s largest up move on the day after earnings was a 20 percent jump in July 2014. The biggest down move has been a 24.2 percent drop following the company’s very first earnings report back in February 2014.
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