Twitter has been dominating headlines since Elon Musk made an offer to buy the company in April, which valued the company at $44 billion (£37 billion).
However, Twitter’s provision of information on the number of spam or fake users remained a sticking point, with Mr Musk requesting proof that fake accounts were less than 5% of users.
Mr Musk formally withdrew his offer earlier this month, citing multiple breaches of the merger agreement. However, Twitter is taking legal action to enforce the agreement and both sides will be keen to avoid paying the agreed $1 billion (£0.8 billion) break fee. The case is scheduled for October.
Twitter shares have fallen by over 45% in the last year, from $72 (£60) to $42 (£35) today. The company’s current share price remains well below Mr Musk’s offer of $54.20 (£45.17) per share, which Twitter says may have influenced his decision to attempt to abort the takeover.
How has Twitter performed in 2022?
Aside from the offer, Twitter recently reported disappointing second quarter results, missing analyst expectations on revenue and earnings per share, according to Refinitiv.
Quarterly revenue decreased by 1% year-on-year to $1.2 billion (£1.0 billion). This represented a substantial shortfall of over 10% against analyst expectations of $1.3 billion (£1.1 billion). Twitter attributed the fall in revenue to “advertising industry headwinds associated with the macroenvironment as well as uncertainty related to the pending acquisition of Twitter.”
There was better news on Monetisable Daily Active Users (mDAUs), which measures users who see advertising on Twitter. mDAUs increased by 17% to 238 million, however this still fell short of analysts’ expectations.
Twitter’s quarterly operating loss widened to $344 million (£287 million), compared to a $30 million (£25 million) operating income for the same period last year.
Costs increased by over 30% to $1.5 billion (£1.3 billion), with Twitter pointing to $33 million (£28 million) of costs relating to the pending acquisition, together with severance costs of $19 million (£16 million).
There was a corresponding impact on cash flow, with quarterly net cash from operations falling from $382 million (£318 million) in 2021 to $30 million (£25 million) in 2022.
Twitter has been granted an expedited trial, scheduled for October 2022. If Mr Musk’s offer fails to complete, it remains to be seen whether Twitter’s planned cost cutting can help it to navigate the challenging environment for advertising and subscription-based services.
Let’s take a closer look at what you need to know about buying and selling Twitter shares.
Investing in share-based investments can be a good way to produce higher returns than cash-based investments. However, your investment can go down as well as up, and you may not get your money back. If you are unsure as to the right investment, you should seek financial advice.
How to buy Twitter shares
Before you decide to open an account, you should set your investment goals, including the amount you wish to invest, the length of time you plan to invest for, whether you are comfortable with the risks involved and whether you can afford to lose the money.
If you are looking to buy Twitter shares, the following steps will guide you through the process:.
1) Open a trading account
Whether you’re an experienced share trader, or a beginner, you’ll need to open an account with a trading platform.
It’s worth taking the time to review the costs involved - most, but not all, platforms charge a share trading fee and some may also charge an annual platform fee for holding shares.
There are a variety of trading platforms available, from online DIY platforms such as Hargreaves Lansdown, AJ Bell and interactive investor, to app-based platforms such as eToro and Trading212.
2) Where is Twitter traded?
The ticker symbol for Twitter is TWTR. Twitter is traded on the New York Stock Exchange in the US which is open for trading from 9.30am to 4pm (Eastern time) from Monday to Friday.
Most trading platforms allow you to purchase US shares. You will be charged a foreign exchange fee (typically around 1%, but may range from 0.15% to 1.5% depending on your platform). Many platforms also charge a slightly higher trading fee for buying US shares.
If you plan to trade US shares regularly, it’s worth looking at the different platforms as their fees can vary significantly. A small number of trading platforms, such as IG, allow you to hold your account in US dollars which may reduce the foreign exchange you have to pay.
You will be requested to complete a W-8BEN form which allows you to benefit from a reduction in withholding tax from 30% to 15% for qualifying US dividends and interest.
You will also have a foreign exchange exposure if you hold US shares. If the pound weakens against the dollar, your shares will be worth more in pounds sterling (and vice versa).
As with UK shares, any profit on US shares will be subject to Capital Gains Tax, subject to your annual allowance (currently £12,300). You will not have to pay Capital Gains Tax if you hold the shares in an Individual Savings Account or Self-Invested Personal Pension.
3) Do your research
To find out more about Twitter, visit the company’s investor relations page.
It’s also worth comparing Twitter’s valuation to other comparable global social network providers. One way is to look at the relative price-earnings ratios - shares trading on a high price-earnings ratio have high expectations of significant growth in the future.
Another useful research tool is brokers’ 12-month share price forecasts, which are available on financial websites. There are currently nearly 30 brokers following Twitter shares, and their price forecasts give an indication of the upside and downside risk of the Twitter share price over the next year.
4) Should you invest on a monthly basis or as a lump sum?
People tend to buy shares either as a lump sum purchase, or drip-feed their investment on a monthly basis over time.
Monthly investing is often referred to as a means of ‘pound cost averaging’, whereby making regular contributions helps to smooth out the highs and lows of the stock market. This provides some protection if the share price falls after you have bought shares, as you will effectively invest at the average share price over the whole period.
However, drip-feeding your investment may sacrifice capital growth if the share price is rising and you may also pay more in share trading fees.
5) Place your order
Once you’re ready to buy shares in Twitter, log in to your trading account. Type in the ticker symbol TWTR and the number of shares you want to buy, or the amount of money you want to invest.
Many platforms also allow you to add a ‘stop loss’ after you’ve bought the shares, which allows you to limit your losses if the share price falls. For example, if you buy shares at £100, and set a stop loss of £90, your shares would be sold if the share price falls below £90, limiting your potential loss to 10%.
6) Monitor Twitter’s performance
Whether you hold shares in just a few, or many, companies, you should review how your shares are performing on a regular basis.
Monitoring your portfolio allows you to make any necessary adjustments, whether buying additional shares, or selling part of your holding.
How to sell your Twitter shares
When you want to sell your Twitter shares, log in to your trading platform, type in the ticker symbol (TWTR) and select the number of shares you want to sell.
If you’ve made a profit, you may have to pay Capital Gains Tax (CGT) on the sale of your shares. However, as mentioned earlier, this is not the case for tax-exempt wrappers such as Individual Savings Accounts.
How to invest in Twitter indirectly
You may make a profit if you invest in Twitter shares, however, holding shares in an individual company is higher risk than investing in a wide range of shares. A diversified portfolio should also reduce volatility.
One option is to invest indirectly in Twitter by investing in a fund, investment trust or exchange-traded fund (ETF) that holds Twitter shares, amongst others. These products provide a ready-made portfolio of shares in a number of different companies.
There is a wide range of options, including global, US and technology funds and investment trusts, together with ETFs that track the NYSE index. However, you will pay an annual management fee for holding these products.
