Twitter said to ‘moving closer to sale’, Google may buy it. Talk has been circulating for weeks that the popular messaging platform was opening its doors to potential buyers. CNBC cited unnamed sources in the report, adding that it is still early in the process.
“Twitter’s board of directors is said to be largely desirous of a deal, according to people close to the situation, but no sale is imminent,” CNBC said. Five minutes into US trading, Twitter shares were up 16.4 per cent at $US21.68, less than one-third of their peak in December 2013 and well below the November 2013 IPO price of $US26 a share. After a very fast start-up Twitter has struggled to further build its user base — hovering just above 300 million active users since the beginning of 2015 — to keep pace with other faster-growing social networking smartphone apps.
In early September reports swirled that Twitter’s board was weighing ways to cut costs, ramp up revenue or possibly maximise shareholder value by selling itself. Twitter has struggled to translate its high public profile into the kind of user growth that has propelled Facebook (FB.O), which now boasts 1.71 billion customers. The company has also suffered from management turmoil since its earliest days. CNBC reported earlier on Friday, citing anonymous sources, that Twitter is in talks with companies that include Alphabet’s (GOOGL.O) Google and Salesforce.com (CRM.N), and may receive a formal bid soon. Twitter and Alphabet could not be reached immediately for comment. Salesforce declined to comment.
Twitter shares jumped more than 20 percent to $22.46 per share on Friday on the report of sales talks, marking the largest one-day rise since their first day of trading in 2013. Twitter, which now has a market value of nearly $16 billion, has been a near-constant focus of takeover speculation amid persistently disappointing sales and user engagement. Morningstar analyst Ali Mogharabi said Alphabet would be the best acquirer for Twitter since it has not yet been able to crack social media on its own despite several efforts. “From a strategic standpoint, we think from it would be more beneficial for Alphabet as opposed to Salesforce,” Mogharabi said.
Morningstar estimates Twitter could be bought for $22 per share. As rivals such as Facebook’s Instagram and Snapchat gain traction with advertisers and social media users, investors have questioned how long Twitter could persist as a stand-alone company. Co-founder Jack Dorsey returned to the company as chief executive in 2015, but his plan for reviving Twitter is at best seen as unfinished.
The company has struggled to generate revenue growth and profits, despite having some 313 million average monthly active users and a growing presence as a source of breaking news. It grew its user base by less than 1 percent in the second quarter.