After a tumultuous week that saw Twitter’s stock price plummet drastically only to sharply rebound late in trading Wednesday (Jan. 20), many are scratching their heads wondering whether the social giant is primed for a takeover or buyout.
The Wall Street Journal reported on rumors which had circulated, and were later denied, of a bid or possible stake by News Corp. (WSJ’s parent company). But, as WSJ points out, Twitter now trades well below its Nov. 2013 initial public offering price of $26 a share, with the price having dropped 43 percent over the past three months and 67 percent since reaching its 52-week high last April.
Twitter has struggled to continue to add new users, awash in a sea of increasingly steep social competition from apps like Snapchat and Instagram vying for users’ precious attention. Despite this, as WSJ notes, Twitter’s more than 300 million monthly active users and rapid mobile-focused revenue growth could overcome these challenges to continue to make the company attractive to potential buyers.
WSJ contends that any prospective buyer would need a strategy for igniting Twitter’s ad sales growth or be in the position to use Twitter’s messaging, data and advertising assets to boost its own capabilities and knowledge base. One prime candidate, in WSJ’s eyes, might be Google parent company Alphabet. Besides having the ability to extend its existing ad sales capabilities to Twitter, the search giant would love to get its hands on Twitter’s data set to enhance its knowledge around mobile user behavior to execute on even more laser-focused ad targeting.
It should be noted that Twitter’s executive team has not hinted at being open to a sale, yet. However, those tunes tend to change when sharp price declines, like the one Twitter’s stock is currently experiencing, don’t right themselves. For investors, this could be a welcome turn.