Twitter’s stock price dropped dramatically on Friday, October 14th, after the news was released that Salesforce would not be purchasing the company. According to company spokespeople, the Twitter buy was not the right fit for their company at this point. It marks the last strong company in the running to purchase the struggling social media company to leave the table. Twitter’s future remains an uncertainty as a result of this.
The immediate public reaction was impressive. Twitter’s stock price fell by as much as 7 percent in the aftermath of the announcement, with Salesforce’s stock rising by about 7 percent simultaneously. Not only did this clearly indicate that Twitter investors were really hoping for the new major investor to move in and acquire the company, it showed that Salesforce investors believed that avoiding the Twitter purchase was a very strong move. At the end of the day, Twitter had dropped by a total of 5.12 percent.
To those not paying attention to this announcement, Twitter’s drop was a huge shock. Its supporting index, the NASDAQ exchange, rose by 0.02 percent. The technology sector as a whole went up by 0.19 percent. While following indices and sectors can often be strong and simple to use methods to create a profit, this would have been an extremely unsuccessful strategy in this particular instance. Following indices and sectors often works, but you need to pay attention to the news, too.
Binary options traders had little to say directly about this development—at first glance. Twitter is traded on some binary options brokers, but not all. It was a very popular asset when the social media company first went public, but after the struggles of the last several months it has fallen out of favor quite a bit. However, although Twitter is one of the major social media companies out there, it isn’t the biggest, and this has actually hurt the company’s ability to grow and maintain any sort of profitability in a big way. Facebook is the dominating force in the world of social media, having an even larger share of the market than Alphabet’s Google+ does. And because of Facebook’s dominance, binary options traders focus quite a bit more on them than on most other major companies. On this same trading day, Facebook rose by 0.05 percent, lagging slightly behind the rest of the sector.
Facebook only moved by a small amount over the course of the day, but from the time that the news about Twitter broke to the closing bell, Facebook moved out of negative territory for the day and was able to finish slightly up for the day. The opening price of the company was much higher than the closing from the day before, but the company was continuously dropping over the course of the day. At about 2 PM, the company moved into negative numbers for the day, but this was at the same time that Twitter collapsed. Facebook is a Twitter competitor, so it was only natural that investors shift their focus from one to the other. Where Twitter failed, Facebook was able to save some ground.
Was it a great opportunity for binary traders? No, not really. But it was an opportunity nonetheless, and it would have been a decent one for both those keeping a very strict eye on the markets for both binary options traders and large volume day traders in the traditional stock market. Whether you like Facebook’s business model or not, you have to admit that they are a strong and innovative company. Businesses like this continue to see profits far into the future, creating great long term call option opportunities, if you want to take advantage of them.