What the hell is happening with Twitter?
Twitter stock jumps up on the merest whisper of a possible sale — after reports began circulating earlier in the week that the social media network was up for grabs, the price began inching up, and talk of the Twitter board of directors meeting on Thursday only fanned enthusiasm.
But that old saw about gravity also applies to Twitter stock. To whit: the company’s share price was down 5.7 percent at midday Thursday on a CNBC report that indicated the company has not actually received any potential bids, and that the board will be giving CEO Jack Dorsey at least a few more quarters to make the company more profitable.
Pivotal Research Group analyst Brian Wieser believes that Twitter’s time is not yet come. “The question of who’s going to buy it is moot,” Wieser told TheWrap. “At this point in time, I don’t think you buy it. It’s going to take a while for them to do the things they know they need to do.” On Twitter’s to-do list: Make the service easier to use for newbies, make it more commerce-friendly, and lean hard into video, which fetches higher ad prices.
Wieser’s not alone in feeling that an acquisition is far from imminent. Analyst firm MoffettNathanson laid out the bear case for the company after Twitter’s second quarter results came out in July:
“Given our experience in covering other sports driven assets, we would be very cautious on building a business on 3rd party, short cycle sports assets,” analyst Michael Nathanson wrote in a note to investors, referring to Twitter’s upcoming Thursday Night Football NFL package and other smaller sports streaming rights the company has won of late.
Wieser said Twitter does in fact hold decent strategic value as a potential acquisition — or rather, that it could, maybe a year or so from now.
The question of who would even buy the company may be moot for now, but it’s still interesting, mostly because the obvious potential bidders don’t seem terribly interested.
We’re not talking about the financial ability of various tech and media companies to accomplish such an acquisition — there are myriad companies with the cash, and a willingness to put it to use, as we’ve seen in the last couple months.
Microsoft’s June purchase of LinkedIn for $26 billion indicates there is money out there. Apple’s (disputed) back-tax bill from the EU ($14.5 billion) is greater than Twitter’s current market cap ($13.47 billion). Google CEO Sundar Pichai could probably find enough money to buy Twitter in his couch cushions.
Aside from further Silicon Valley amalgamation, potential buyers like Time Warner have been floated in various reports. But even traditional media companies like Time Warner might be reluctant to invest until either their need for a 300-million-user digital community becomes truly undeniable, or Twitter phoenixes out of precipitously slowing ad revenue growth. Or, as Nathanson put it in his July note:
“Lately, we have heard some brokers are pitching that Twitter will be acquired by a traditional media company that needs a digital strategy. We hope not and feel that deal would bring back long-forgotten nightmares of TWX-AOL” — the Time Warner-AOL disaster of a merger in 2000 — “and News Corp.-MySpace.”