Last Thursday’s Twitter board meeting was a big one for investors – it was the first time the company had signalled they may be considering takeover offers. Speculation has been rife on the subject for months, with many wondering how long Twitter can go on being a standalone company without seeing an improvement in their lacklustre results.
However, after the board meeting Twitter (NYSE:TWTR) told CNBC that there were “no bids on the table”, and that it would be exploring further cost cuts instead. This begs the question: why cant Twitter, the pioneering social media giant, find a buyer?
One reason is its lack of investment potential. The stock has dropped significantly since highs in 2015, and although trading marginally above April lows, it dropped 6 percent in the wake of Thursday’s announcement. On Friday the shares were selling at around $18 – 20 percent down this year and well below their IPO of $26 three years ago.
Since going public in November 2013 the company has failed to make a profit, despite the resignation of ex-CEO Dick Costolo. However, the company is reportedly up to $18 billion, begging the question – how good an investment is it for a company looking to take it over?
Twitter have remained staunchly independent thus far but sparked interest last month when the firm’s largest shareholder, Evan Williams, claimed that it must consider all its options when it comes to a merger or acquisition. Underlining his confidence in current CEO Jack Dorsey, he continued, “We’re in a strong position now, and as a board member we have to consider the right options.”
Perhaps a takeover is what is needed to help the flailing social media platform return to strength. Its stats are impressive: 313 million monthly active users, of whom 66 million – or 21% – are in the US. Michael Pachter, of Wedbush Securities, said of the potential for a merger:
“Twitter has to figure out who they want to be. They should want to be the first source of news. Their addressable market is the two-and-a-half-billion people on the internet who want to know about anything.”
He continued, “There’s only one strategic buyer, and it’s Facebook … [Twitter is] instant news, and that’s the one element that Facebook is missing. I think Facebook really wants to be a media company, and that’s the one element of media that they’re really sorely lacking.”
2016 has been a strong year for tech company takeovers, with Microsoft buying up workplace social network LinkedIn for $26 billion in order to bring relevance to the brand as its Office 365 programme showed flagging sales. In July, Verizon bought up Yahoo, alongside its blogging service Tumblr, for $4.8 billion. The question is – can Twitter find a buyer to top this year’s tech takeovers?