New data shows short interest at 20% of float as of April 30th. This does not include the massive added short shares gone short last week (May) in the low 30s high 20s. Short shares need to be covered, can be called in by broker, carry a heft interest rate and cost for stocks that are hard to borrow such as TWTR. Shorting a stock at these levels need to materialize in results and collapse of company very quickly if not shorts end up losing indefinite money. Even HLF when Ackman portrayed it as fraud didn't go to zero straight, it went up 200% from where Ackman announced his position. All I've got to say to shorts is that if you declare war on a company single handedly, you are going to lose real bad.
The safest short would be the one that covers at the open of trading markets and gets out of the way.
They trapped all the shorts yesterday by making them think lots of shares came to market
Barron's does its main write up over the weekend. Google also does its M&A over the weekend. Hell of a Monday to come.
It makes the most amount of sense, as FB has shown desire to control the social market and has shown previously it does not shy away putting its stock price to work as we saw with Whatsapp etc.
This will rock the social stocks. If and when TWTR is announced, next will be Yelp.
The rumor is 0.80 FB shares for every TWTR, since both have sufficient cash already.
Every time RSI (Relative Strength Indicator) of a stock dips below 30 and Stochastics below 20, that stock bounces very hard tot he upside (15-20%) and is up consecutively between 3-5 days. Last time TWTR with similar technical bounced from 40 to 47 in 2 days.
Today RSI at 26 and Stochastics at 7, unsustainably oversold.
From Motely Fool Sunday May 11, 2013
Warren Buffett loves buying companies on the cheap. After tumbling nearly 50% so far in 2014, Twitter (NYSE: TWTR ) is a whole lot cheaper. Could Buffett be a buyer?
The difficult five months
2014 has been rough for Twitter. Wall Street was disappointed with its user growth. Its employees can begin selling their shares. And the lofty valuation has caused many to unload the popular social media site. Fear is in the air.
Warren Buffett of Berkshire Hathaway (NYSE: BRK-A ) once famously remarked:
Be fearful when others are greedy, and be greedy when others are fearful.
And he has made no secret that he's looking to make a major acquisition. The natural question then becomes, would Warren Buffett acquire Twitter?
....With that in mind, it's not crazy to think Twitter's business model may pique the interests of Buffett.
The four key characteristics
Taking it a step further, Buffett once said when considering buying a business:
Charlie and I look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag.
In fact, it can be argued Twitter meets all four of those characteristics too. It's simple. It's ad revenue nearly doubled -- from $0.74 to $1.44 per 1,000 views -- over the last year. It has a remarkably successful management team. With the plummeting price, Buffett may suggest its current value is "
It's a cult and not the same excuse that teenagers are flocking away as used against Facebook, TWTR is now the fastest means of disseminating news and emergencies among other matters between users. Not to mention the number of users.
Based on many reports this weekend the massive volume sell off on Tuesday and Wednesday was due to blocked insider shares coming unlocked being lent out to short for shorting. Uncharacteristically TWTR shares were again available for borrowing on Tuesday and Wednesday but became hard to borrow since. This means all those who wanted to short ended up getting short at the low 30s high 20s. There were not many significant volume of insider sales when compared to 200 Million volume in 2 days. 200 Million would actually indicate half of the available shares and as announced in an 8K filing the other half committed to non-selling.
So unless every other insider share was sold, the volume represents another kind of selling, "short selling". This was a major short or bear trap by the institutions who allowed borrowing and selling of TWTR unlocked shares in their position. Same institutions were most probably buyers of those shares sold by shorts, which will run and squeeze the trapped shorts with the next news catalyst.
However what a lowered stock price creates is the opportunity of takeover by the 3 most interested players FB, GOOG and AAPL as reported in Barron's and by Gene Munster the internet analyst on CNBC. This will add another feeding frenzy above and beyond the institutional squeeze coming into play. An M&A at this level will also be very lucrative for the underwriters of the deal which would most probably be the same institutions lending out the unlocked insider shares in the 2 high volume days.
FB, GOOG & AAPL know they need to act fast to tae advantage of this lower price before short squeeze pushes it up higher and forces them into a higher premium.
-This is the week that earnings warnings come out
-Other than Thursday and Friday, market internals have been negative and anemic
-Markets do not advance further intraday after opening up, this means it is the leftover shorts covering and there is no follow through buying coming in
-If the ECB news and jobs report were truly positive events as touted, stocks should've gapped opened much higher on much higher than normal volume and completely broken out on these events
-Volume has been anemic by all measures lately and average daily volumes are significantly below 3 month averages...Volume is confirmation and the volume does not confirm
-VIX under 11 hasn't been seen since 2007
-Many bears on media have turned from bearish to bullish in the past 2 days, that's another psychological top
...And if you bulls think none of these matter because this time it's different, same things were said in 1999-200, about housing in 2007 and on and on.
You can't watch a TV program without the name Tweet this Tweet that being mentioned. It is more in everyday life than FB is.
Thu, May 8, 2014, 7:48 PM EDT - U.S. Markets closed
It is no secret that Twitter (NYSE: TWTR) has been one of the worst performing stocks over the past few trading sessions.
In an exclusive interview with Benzinga, Karl Loomes of SunGard’s Astec Analytics discussed the change in short interest for the issue.
Astec Analytics measures real time security lending, which serves as a proxy for short interest.
Loomes started by stating that, “borrowing has been steadily increasing since Twitter has been listed.” The volume of this borrowing has picked up a significant amount of steam since the start of the month.
Utilization is the percentage of shares available to borrow that are already being used. Astec Analytics measures utilization for the stock to be 100 percent...
...Another takeaway of this data is that shorts have not started covering their positions yet. If the share price moves sideways or starts to rise, it is not unreasonable that many shorts will start to take profits.
Shares of the company are trading at $31.60, down almost 20 percent on the week.