Market cap and enterprise value multiples
On May 10, Twitter (TWTR) was the world’s fourth-largest Internet player in terms of market capitalization at ~$13.6 billion. In comparison, its peers had the following market caps on the same day:
- eBay (EBAY): $37.2 billion
- Yelp (YELP): ~$2.2 billion
- Facebook (FB): ~$433.9 billion
- Amazon (AMZN): ~$455.4 billion
On May 10, Twitter was trading at a forward EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple of ~18.1x. In comparison, its peers eBay, Yelp, Facebook, and Amazon had EV-to-EBITDA multiples of ~11.3x, 12.5x, ~17.1x, and 22.9x, respectively. Enterprise value is a measure of a company’s total value, often used as a more comprehensive alternative to equity market capitalization.
In the May 10, 2017, trading session, Twitter (TWTR) stock closed at $18.54, close to its upper Bollinger Band of $20. This implies that the stock could be overbought.
When the price of a stock is close to the upper Bollinger Band, it is considered to be overbought, which can trigger a sell signal for investors. On the other hand, a stock is considered oversold if it is trading close to the lower band, which can trigger a buy signal for investors.
The moving average convergence divergence (or MACD) refers to the difference between the long-term and short-term moving averages. Twitter’s MACD was 0.71 in the last 14 days.