When news emerged on Friday that Twiter is exploring a possible sale — asking price: anywhere from $18 to $30 billion — and potential buyers including Google and Salesforce.com were kicking the tires, the share price for the social media company (which also owns live streaming app Periscope) rose 21 percent.
On Monday, the plot thickened with reports that the Walt Disney Company is working with a financial advisor to evaluate a bid for the company.
Barron’s Tech Trader Daily reported that Citigroup analyst Walter Pritchard was not keen on Salesforce.com, a San Francisco-based cloud computing company, as a Twitter buyer, writing that such a purchase “would fuel concerns that [Salesforce] is de-focusing on for ‘customer’ area in a quest to stretch for growth.” More significantly, he pointed out that a bid from Salesforce — which has a current valuation of approximately $50 billion — would likely come in too low.
On the other hand, both Disney and Google have the deep pockets and infrastructure to make Twitter a viable purchase.
Disney has vast riches of IP that could be put to work on Twitter in interesting ways, from Mickey Mouse and “Star Wars” to ESPN. The latter will get its own dedicated VOD service by the end of the year, powered by BAMTech, a video streaming tech company founded Major League Baseball (MLB) that Disney bought a 33% stake in for $1 billion last month.
While Disney’s investment BAMTech had a concrete purpose from the get-go, it never seemed to get a handle on what to do with Maker Studios, the multi-channel network it acquired for $675 million in March 2015. Of course $675 million is a lot less than the $18–30 billion that Twitter is reportedly asking. It’s more in line with the $580 million News Corporation paid for MySpace back in 2005, when it was on the verge of (briefly) overtaking Google as the most-visited web site in the U.S. In the end, the buy was an embarrassing debacle for News Corporation. Following Q4 2010 losses of $156 million, MySpace was sold to Specific Media for a reported $30 million.
Unlike Disney, Google is native to the tech space Twitter occupies, and therefore would be less likely to “MySpace” it. Abd Twitter would give the company (which now resides under the Alphabet corporate umbrella) a collection of fast-twitch social media apps (including Vine and Periscope) to complement its YouTube platform.
Although Twitter is an attractive acquisition target, it is not without its problems, including slow user growth. In Q1 2016, it reported that its number of monthly active users had grown just 3%, year-to-year, to 310 million. In June, it was bested by Snapchat, which reportedly hit 150 million daily active users, surpassing Twitter, which has less than 140 million.
That same month, Suntrust Robinson analyst Bob Peck saw the writing on the wall, observing that “if the current trend of meager user and engagement growth remains, we think it’s inevitable that Twitter will need to pursue M&A alternatives as has been discussed in the media for some time.”