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Following the Twitter Stock

Using Twitter as an AssetIt’s been a little over a month since Twitter (TWTR) debuted on Wall Street. The first day of stock sales were amazing. The IPO began at $26 per share, and soared up to over $44 by the end of the day. After that, very little progress was made with this stock, making it a nightmare for binary options traders looking to cash in on the quick action of a popular stock. Twitter had all of the makings of the next hot thing, but prices didn’t really move much for a few days. Finally, on November 25th, prices dropped down below $40 per share. Financial analysts have been looking for reasons why this stock has done so little, and some have even gone as far as to say that Twitter was the next Facebook, thanks to the lack of movement.

That changed this morning when Twitter saw a big jump in price. As of 2:00 pm on the 9th of December, TWTR had already risen over 9 percent in price during the course of the day. Traders have been left scratching their heads, trying to find out why after a month of relative stagnation this particular stock has begun to move with such vigor. This is a good example, however, of how the news can have a drastic short term effect upon a company’s stock price. Over the weekend, it was released to the media that Twitter and other major tech companies will be teaming up to help prevent NSA snooping within their sites. These include Google, Yahoo, and Microsoft, too. For the most part, these other companies have seen gains, too, but nowhere nearly as big as Twitter’s.

Why is Twitter booming at such a big rate in comparison to these other companies? This is a tough question. Perhaps the answer lies within the newness of Twitter’s public stock. The others listed within this coalition are well established companies and it isn’t really a risk for them to stand up against government snooping. But Twitter is very new compared to them, and this can be perceived as being a lot riskier of an action than those taken by the others. Twitter, it seems, has a lot more to gain than a giant like Microsoft by standing up for the privacy of its customers.

They also have a lot more to risk, though. If this venture doesn’t work out, even though it has been done in the name of protecting their customers’ rights, Microsoft will rebound much more easily than Twitter. Right now this doesn’t seem to be a problem since public sentiment is against the NSA, but it is a possibility.

The bottom line is that this is good news for all sorts of tech stocks. If a united front is going to be made against governmental intrusions, it can go a long way toward increasing consumer confidence. This means more sales and thus more revenue for these companies. However, there is speculation. Amongst experts, it is a common opinion that coalitions like this rarely succeed other than to raise awareness about an issue. This is an important concept to keep in mind, especially if you are looking at longer term trades. The immediate news is that these tech giants saw an increase in stock price, but whether or not this phenomenon will last more than a few days will soon be seen.

One last thing to keep in mind is that this may have a very short term negative impact on competitors that are not involved in the coalition, but the reality is that if this does happen, it will not last for very long at all. Within a week or so, competitors will probably not be affected by this news at all–assuming no further news on this front comes to light.
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