Twitter Inc (NYSE:TWTR) short seller are in trouble says Fox Business News correspondent Charlie Gasparino. The media magnate said on Twitter this morning that the flight of leaders from the firm’s C-suite will make it close to impossible for the firm to grow. That means there’s only one solution for Twitter right now, and the firm’s weakness may also be it strength.
Mr. Gasparino highlighted a problem that “makes the short thesis problematic.” The investor said in an earlier Tweet, “im far from a tech expert but i know abt business and i cant understand how
$TWTR can grow while losing so many execs in the c-suite.” The firm’s lack of growth prospects may actually put shares in a stronger position according to his logic.
Weakness is strength at Twitter
Mr. Gasparino was referring to the high profile departure of more than one key Twitter leader in recent weeks. CEO Dick Costolo will have his last day at work at the head of the firm on Tuesday, while on Friday Rishi Garg, VP in charge of of Twitter’s corporate development, said he would leave the firm.
With no solid team to head up strategy for the time being, Twitter is going to have a very hard time spurring growth. The firm’s future will depend on leadership able to take a team in disarray and force them to come together and put out a great product.
Mr. Gasparino’s point is that Twitter has no leader likely to do that, and the worsening brain drain means that the firm may not be able to heal its own ills any time soon. On Monday Bob Peck from SunTrust said that the firm’s talent problem would likely slow growth for some time to come, and a long period of weakness may be ahead as a result.
Mr. Gasparino thinks that the weakness may not be as long as some others suggest. He thinks that the big problem with the traders betting against the firm is that it is too weak to bet against. With its current feeble stance, Twitter “HAS To Be Sold” he wrote on the social network this morning.
He added that “tech bankers are saying those knuckleheads are “open” now to a sale.” It’s clear that he thinks that rumor makes sense, and that for him that will protect the value of shares at Twitter.
Selling Twitter to the market
Belief that a sale may be around the corner has been fueled by Twitter’s choice for CEO. Jack Dorsey holds a large amount of shares in Twitter, and he’s the perfect front for a negotiating team. The question is, who would actually try to buy the site?
Google and Facebook are the obvious firms that Wall Street has talked about, but Twitter has a lot of options that may not be covered inside of the tech world. There is always the possibility that Jack Dorsey, or he and a team of others, could try to take the firm private, or any other number of options for the firm.
Rumors broke on this morning’s market that Facebook Inc (NASDAQ:FB) is looking into buying Twitter Inc.. Shares in the firm flew quickly upward, and were up by more than 3 percent at 11AM EST this morning.
We’ve seen plenty of rumors that Twitter was going to be acquired by Facebook or Google in recent weeks, and many of them have caused volume spikes in the firm’s stock. There doesn’t seem to be any reason to believe that this rumor carries any more weight than the previous ones, but with the pressure on for Twitter to sell out, one of the rumors may eventually be correct.
For now, however, Charlie Gasparino doesn’t see the firm not being sold as any sort of option. That may help support shares on today’s market. At time of writing stock was selling for 0.88 percent higher than yesterday’s close. The wider market appeared to be heading up by about the same amount after yesterday’s large losses across the board.
Update 10:59 EST: Added paragraphs on rumors breaking on Tuesday’s market about the possible takeover of Twitter by Facebook.