The US stock market isn’t faring too well in 2022. Most charts you open these days are going to be in the red for the year, including some of the most popular in the US indices like the S&P 500 tracking the stock performance of the 500 leading publicly traded companies in the States. However, just because SPY is down doesn’t mean all the stocks it lists are down too. Some, such as Twitter, are running counter to general market trends. Let’s take a look at what analyst’s forecasts are for this communications company.
The S&P 500 Index was founded in the 1950s and has been calculated by Standard & Poor’s (the company it was named after) ever since.
Ending 2021 on a strong note the index started a sharp decline that’s lasted for 9 months so far and has led to a YTD loss of over 24% for the S&P 500.
In early 2022, it seemed that the overall market was getting back to normal – coronavirus restrictions were being lifted, and air travel and freight transport were being resumed. Things were heading in a positive direction.
All of it faded away with the aggravation of the geopolitical situation in Europe. Though American companies are far enough away from this conflict, international markets are definitely incommoded by the energy crisis and supply disruptions.
Inflation hit an all-time record. In the US its rate reached a 40-year high of 8.6%, and the Fed started steadily hiking interest rates to drive down prices. All of this and more is what’s landed the market in its current predicament, and even with all the declines, many prominent investors still believe the market is overvalued.
One of these abovementioned overvalued companies is Twitter. The company’s stock is characterized by sharp ups and downs, and the net result is a 15% fall over the year so far.
This rollercoaster ride is largely down to the actions of one person by the name of Elon Musk. There have been uncountable events, so not to lose track we need to reconstruct the chronology.
Twitter’s shares had been slowly and surely falling through 2022, until suddenly Musk showed up in April. He soon became Twitter’s shareholder, buying 9.1% of the company, and not long after he announced that he wanted to buy Twitter outright at the grand old price of $54.2 per share. After a short deliberation the board approved the deal. The company’s shares of course shot up in value.
It was running like clockwork until Musk announced he was putting the deal on hold in May at a pretext of numerous bots on the platform. Well, while Elon was waiting, the stock reacted with an immediate and severe drop, and Musk’s subsequent announcement that he was actually still going to buy the platform didn’t do much to save the day.
In July the businessman decided to withdraw the offer entirely because, according to him, Twitter broke the terms of the deal. In return, Twitter representatives went to court and argued that Mr Musk had decided to back out of the agreement because of declines in the shares’ price.
Fast forward to October when the court hearings are due to begin, he backtracks once again to say he will in fact buy Twitter at the agreed upon price of $54.20 despite continued losses in the stock. Interesting, isn’t it? Maybe in such way he wanted to avoid the reputational loss, fines, and compensation that would surely befall the businessman if he lost the case. But either way, Twitter’s stock popped a solid 20%
Is this the end of this fascinating series? Knowing Elon, it’s unlikely. What is clear though, is that his tweets will likely continue to have an impact on not only Twitter’s stock but that of other securities like Tesla too. There is definitely a potential opportunity here for investors to make money on the sudden advance-decline of Twitter and Elon-related stocks.
There is no clarity at all as to when the world will come close to economic recovery, however we can be sure that even in a situation like this it’s always possible to find promising opportunities that go against general market trends.
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