Trump failed to boost Twitter; will he boost the airlines?
Fiona Cincotta February 9, 2017 8:40 PM
<p>The US session has kicked off on the front foot with the Nasdaq touching record highs within minutes of opening and the S&P and Dow […]</p>
The US session has kicked off on the front foot with the Nasdaq touching record highs within minutes of opening and the S&P and Dow Jones edging higher. After some fairly choppy action over the last two weeks, this week in contrast continues to be thin on volatility. Although there is not a huge amount of movement on the indices, we are seeing some significant movement on individual stocks.
Twitter growth falls short
Twitter released a disappointing set of results, although the social media giant beat on earnings per share, the overriding concern is the miss on revenue. Twitter had revenue of $717m in the fourth quarter versus expectations of $740m.
This miss is such a big deal because Twitter is receiving more attention than ever, thanks to President Trump’s usage, however the firm is failing to convert this attention into growth. They have the resources but they haven’t managed to create a platform that attracts more users and they haven’t been able to create a viable return for advertisers. Yes, the number of users grew, but only marginally, 7% in the quarter, and this was a quarter with US Presidential elections so user growth should have been much higher. When compared to Snapchat, which is estimated to have seen user growth of 90% in 2016, the problem of Twitter is laid bare.
The shares fell 7% on the release of the results in the pre-market and continued to grind lower, opening trading down 10%.
Trump wades into airlines
President Trump is working his way through the sectors, almost company by company, meeting with the CEO’s and today it is the turn of the Airlines. As far as the markets are concerned these meetings this is good news and demonstrates Trump’s pro-business attitude. If we look back to Trump meeting with pharmaceutical bosses, the stocks then rallied and haven’t looked back since.
Security and regulation are the subjects to be covered off in today’s meeting and the expectation is that Trump will be receptive to deregulation and will look to protect national airlines in the face of subsidised foreign competition. Should we see policy coming out to support this, then shares in aviation firms could soon be taking off.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.