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What's going on?
Twitter shares jumped more than 20% on Friday after a report from CNBC suggested that Salesforce and Alphabet are among a number of tech companies considering launching bids to take over the (somewhat) struggling social media company.
What does this mean?
Twitter has been struggling with flat-ish user growth and declining revenue growth in recent years. It brought back one of its co-founders, Jack Dorsey, to be its CEO last year and instituted a number of changes, including streaming live football (NFL) on the platform. So far, however, it hasnt translated into improved user growth, and there have been signs that the interest of advertisers is waning. Nevertheless, the social media company, with its 300 million users and its trove of data (often real-time / live data) could be quite valuable to a larger company.
Why should I care?
The bigger picture: Twitter might be drawing a lesson from Yahoo.
As Business Insider points out, Twitters predicament is reminiscent of Yahoos situation almost a decade ago. Back in 2008, Yahoo spurned a $42 billion takeover attempt by Microsoft, preferring to remain independent instead. In subsequent years, it saw other tech giants take its place while its value declined to the $5 billion or so that Verizon agreed to pay for it recently. The point? Twitter might be trying to sell itself rather than risk facing a similar fate as Yahoo.
For the stocks: The stock prices of Twitters supposed potential acquirers went down.
Salesforces shares sold off almost 6%, which suggests its investors wouldn’t be welcoming to a deal. Most commentators think Twitter would be a better fit for Alphabet since Twitters recent push into live video might work well with Alphabet-owned YouTube. Twitter is likely valuable to someone – the question, however, is at what price?
Originally posted as part of the Finimize daily email.
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