Can Twitter Inc Find A Buyer?
ValueWalk | Jun 21, 2016 01:26AM ET
Twitter Inc (NYSE:TWTR) keeps grasping at straws to try to save itself and now there’s some acquisition news about the struggling micro-blogging platform. The company is FOX Business , Steve Tobak argues against Twitter Inc (NYSE:TWTR) ever being able to find a suitor. He notes that SunTrust analyst Robert Peck has been pushing for the micro-blogging platform to be acquired for years, even publishing a list of ten reasons Yahoo (NASDAQ:YHOO) should acquire it in January 2015. Now he’s being less specific, although he thinks Google parent company Alphabet (NASDAQ:GOOGL) will buy it but not until next year at the earliest.
However, Tobak think no one should ever buy Twitter. In fact, “Nobody is that dumb,” he wrote, before launching into the many reasons he thinks it would be ludicrous to buy it.
For example, he noted that the company has a lot of internal problems, from a steady stream of executive departures to product continuity, user engagement , and retention problems. He also notes that the company is still losing money as stock-based compensation and other expenses weigh on it.
He also considered the names that have floated as potential acquirers for Twitter Inc (NYSE:TWTR), such as Microsoft, which doesn’t really need the micro-blogging platform because LinkedIn’s enterprise focus makes it a much better fit than Twitter would be. Facebook is already so popular that it doesn’t need to bring a struggling competitor under its umbrella, and Verizon is focused more on mobile and video, which are two areas the micro-blogging platform would not help it with. He also points out that Alphabet already gets to include tweets in its search results, so he sees no reason for it to buy Twitter.
h3 Tempted to take over Twitter?/h3Gene Marcial of CBS Moneywatch takes up the other side of the argument, citing points from S&P Global Market Intelligence analyst Scott Kessler, who has a Buy rating and $21 per share price target on Twitter. He sees plenty of opportunities for Twitter to grow its user base and improve engagement and monetization. He doesn’t believe investors give the company enough credit for its brand, platform and history of mobile success. He also believes the markets have basically been ignoring the value of Periscope and Vine.
Kessler pointed out that data was a big part of Microsoft’s decision to buy LinkedIn, and he believes Twitter Inc (NYSE:TWTR) also has a lot of valuable data, which could make it very attractive to Alphabet. The analyst also believes the micro-blogging platform will finally shift into the green this year to earnings per share of 52 cents, compared to last year’s losses of 79 cents per share.
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