Twitter (NYSE: TWTR) shares surged to a new all-time high last week after the social media company said it aims to double its annual revenue to $7.5 billion by 2023, and expects to increase its use base by an average of nearly 20% in each of the next three years.
According to a regulatory filing, the company has targeted 315 million daily active users in two years, an increase from the 192 million active users it saw per day in the fourth quarter of 2020.
And as part of its first “Analyst Day” since 2014, Twitter also said it wants to “double development velocity” by the end of 2023, i.e. “doubling the number of features shipped per employee,” which effectively means the company plans to start moving a lot faster.
But while Twitter’s newfound ambition is certainly encouraging, the stock’s technical picture isn’t so bright.
“The problem is, on a technical basis, it’s also getting incredibly overbought,” said Matt Maley, chief market strategist at Miller Tabak.
Maley noted that the stock’s relative strength index (RSI) pushed well into overbought territory last week. And the last time it did so, the stock suffered a correction which it may well be heading into now, a week later.
“If you really like this one and believe what they’re saying, [I’d] let it come back to you, I think it’s going to see a pretty decent pullback before too long,” Maley said.
And pullback it has. In the week since hitting it’s record high, Twitter shares are down more than 10% and look poised to continue to head lower.
Laffer Tengler Investments’ Nancy Tengler agrees that investors should wait before buying Twitter shares.
“We own the stock, we’ve been selling the stock for the past few months and weeks,” Tengler said. “I think a lot of the good news is already reflected in the price.”
“I think you get a better entry point soon,” Tengler added, “and then you might want to dip your toe back in.”