Shares of social network Twitter (TWTR) took a hit this week, trading as much as 9.9% lower at one point. By the end of the week, shares were down by a total of 7.7%.
The stock's decline was likely primarily related to a tough week for tech stocks in general -- the tech-heavy Nasdaq Composite fell by about 3%.
It's been a difficult three months for Twitter. The stock lost about 10% even as the S&P 500 rose by more than 1% over the period. This reflects a largely challenging period for growth tech stocks like Twitter, many of which are underperforming the market recently. Based on the pricing trends for dividend-paying large caps versus growth tech stocks, some investors appear to be moving away from the more volatile tech sector and investing instead in slower-growing companies with greater cash flows relative to their valuations.
Whatever the case, it's not like long-term Twitter investors are doing poorly. Its shares are up 120% over the past three years and 40% in the past 12 months, easily beating the S&P 500 and Nasdaq Composite across both periods.
Twitter is slated to deliver its third-quarter report late this month, and investors expect to see extremely strong sales growth. On average, analysts are modeling for revenue of $1.28 billion, compared to its $936 million in revenue in the prior-year period.
Long-term investors should largely ignore a stock's short-term volatility when trying to decide whether or not to buy it. Instead, they should assess stocks based on their fundamentals. Based on Twitter's strong momentum in both user growth and sales growth, this could be a good buying opportunity.