Why The Rally In Twitter Inc (TWTR) Stock Could Continue For Now

3 reasons why the rally in Twitter Inc (NYSE:TWTR) stock could continue in the first week of May 2017.

San Francisco, California-based Twitter Inc (NYSE:TWTR) has left a lot of investors enthused following its Q1 earnings release in the week gone by. The micro-blogging platform recorded better than expected user growth, which was the primary reason why the company's quarterly results were well received by investors. The earnings release also saw the company beat consensus estimates of revenue and non-GAAP earnings per share for the quarter. Twitter shares are now up by over 12% since. However, the rally looks set to continue going into the first week of May. Here are 3 reasons why.

Twitter Ties Up With Bloomberg For Exclusive Live Streaming Content.

After a long wait, Twitter has finally found its first partner for round the clock live content streaming. Bloomberg, which is a leading news service globally, will produce content exclusively for the social network, which will be live streamed via the platform round the clock, every day of the week. According to a news report by WSJ:

The channel, which has yet to be named and is expected to begin operating this fall, won’t simply rebroadcast footage from Bloomberg’s existing television operation, but will be made up of live news reporting from the news outlet’s bureaus around the world, as well as a curated and verified mix of video posted on Twitter by the social-media platform’s users.

Clearly, this is a big win for Twitter, which is trying to reposition itself by focusing on video content. Twitter's live streaming deals have been interesting, but patchy, with not enough content being live streamed on a day-to-day basis. Events have been spaced out, and this is likely to have slowed down Twitter's efforts aimed at cementing its place as a live video content streaming destination. To make matters worse, competitors have been catching up, with big players like Amazon.com Inc (NASDAQ:AMZN) entering the fray and grabbing opportunities like the NFL, which until last year, were exclusive to Twitter, in terms of live online video streaming. This thrust in 24-hour streaming will help Twitter build its identity as a live streaming platform, and could potentially help it gain from the increasing amount of cord cutting.

Jack Dorsey Is At It Again, Buying Twitter Stock In Heaps.

On April 28th, last Friday, news emerged that Twitter CEO Jack Dorsey had bought Twitter shares. After having bought shares of the company worth $7 million earlier, in Feb this year, Jack Dorsey is at it again, showing his faith in the company's prospects. This time around, Dorsey bought shares worth about $9.5 million. According to the news report by Reuters:

"Dorsey bought 574,002 Twitter shares in multiple transactions at prices ranging between $16.47 and $16.74 per share"

Ironically, Dorsey bought at similar price levels back in February this year. And while the move enthused investors back then, the momentum has clearly not lasted. So, the excitement this generates could be short lived this time as well. However, such things do tend to drive positive momentum and sentiment. Again, it's quite the irony that Twitter's co-founder Evan Williams is selling shares of the company, in contrast to Dorsey. In fact, he's selling about 30% of his stake in the company. We wouldn't read too much into Dorsey's purchase of the company's shares. However, in the coming week, the move will likely inspire confidence among investors.

The Technicals Have Turned Bullish For Twitter Inc.

Technicals suggest that Twitter stock could be in for a further rally. While indicators like the Bollinger Bands and Relative Strength Index (RSI) suggest that the stock has entered overbought territory, other indicators suggest otherwise. Twitter's stock price has broken out above multiple Simple Moving Averages (SMAs), the 20 day SMA, the 50 day SMA and the 100 day SMA. What's more, all of this has come on the back of strong volumes, indicating that the trend could continue in the near term.

Summing It Up - Twitter stock  looks headed higher in the coming week.

Good news has been hard to come by for Twitter Inc shareholders. And now that it has come, investors are likely to hold onto it for a bit. Some folks have even started interpreting the small improvements as the first signs of a turnaround. While they may well be the first signs, we think that such an interpretation would be premature at this time. Nonetheless, one thing looks fairly likely - Twitter shares look set for a further rally. If you're risk averse, though, you would do well to sit out of the stock for now. While there are some improvements in the company's performance, competitors like Instagram are growing at a much faster clip, and are likely to generate further interest from advertisers. Unless Twitter manages to show improvements for another 2 quarters, don't buy in.

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