On the home stretch in the race for the White House, Donald Trump once again "chirped" loudly and intensively. Be it attacks against Democratic candidate Joe Biden or short video sequences of the final rallies - the US president chased one message after another on his Twitter account. With more than 87 million followers, Trump is one of the most wide-reaching users of the short news service. Nevertheless, Twitter was less able to profit from the election campaign than expected. For the 3rd quarter, the service reported 187 million monthly users. Although the community has grown by 29% compared to the same period last year, the number of users has not increased. Compared to the 2nd quarter, however, only 1 million new members joined. Analysts had expected an increase to 195.2 million.
Wall Street was deeply disappointed by this discrepancy. On the two trading days following the publication of the interim report, Twitter shares plunged by around a quarter. The Nasdaq stock had climbed above the USD 50 mark for the first time since April 2015. It was not only the stagnating user numbers over the summer that angered investors. Twitter also made cautious comments about the future business outlook. More events and product presentations had taken place in October as in the previous month. The service could also benefit from an early and more digital Christmas shopping season than ever before. However, yesterday's election day threatens to put a spanner in the works for Twitter. Should there be unrest, the management fears that advertisers will be reluctant to buy. But that's not enough: Because of the constant improvements in the offer, CEO Jack Dorsey expects a cost increase of almost a fifth for the last three months of the year. Despite everything, Dorsey stresses that - apart from the election period - there is no reason to doubt that the sales trends from September will continue or even improve.
However, especially in view of the elections, some investors may have used the quarterly report to make cash first. Compared to the low of mid-March, the Twitter share had risen by more than 160% to the latest top. Another argument in favour of the profit-taking theory is that the social media giant Facebook and other technology giants also came under pressure at the turn of the month - despite decent figures. From a technical point of view, Twitter's task now is to maintain the upward trend that began in spring. At the beginning of the week, the stock plunged into the support zone at just under USD 40. This is where the 100-day line runs. Just below the moving average, the chart shows a horizontal support. Should the price take advantage of this double support and turn upward, a first potential resistance level is waiting at USD 44.
Leonteq is reacting to the latest development with a special structure. The Twin-Win Autocall certificate combines the chance of a payout with the possibility to participate in both rising and falling prices of Twitter. The conditional coupon amounts to 20% p.a. It is paid out as soon as the underlying asset is quoted above the starting level (100% of the initial fixing) on one of the semi-annual observation days. Due to the integrated autocall function, the product would be redeemed prematurely in this case. The investor would receive 100% of the denomination in addition to the Coupon. If the trigger does not apply, the lost coupon is stored. As soon as the prerequisite is fulfilled in a later attempt, the issuer will make up for lost payments. The memory function is active until the end of the term. At this time, the participation component also takes effect: If Twitter quotes above the starting value, the repayment increases accordingly. The same applies in the event of declining prices. However, the downside participation depends on the absolute performance at the European barrier at 70%. As soon as Twitter rips this mark to the final fix, the partial protection expires. The redemption then melts according to the decline of the underlying asset.
Issuer: Leonteq Securities AG (Rating: Fitch BBB)
Coupon Trigger Level: 120%
Memory Coupon
Autocall Frequency: Semi-anually
Participation: 100% in the absolute performance (if no barrier event)
We look forward to answering all of your questions about our products and how they are traded. Please don't hesitate to get in touch! Phone: 058 800 11 11, email info@leonteq.com or contact us here.
