Twitter Inc shares hit a twelve month low in trading on Wednesday, and most of the market is feeling downright depressed about the firm. Jim Cramer, the CNBC personality who has spent a great deal of time talking about the firm, says that Twitter might be dead for the time being, but a buyout should be on the cards in the “longer term.”
Mr. Cramer was responding to a comment on the social network from an investor who thought that saying the Twitter was dead was a little bit harsh. Cramer, who has managed to master the format, responded succinctly. “Near-term it is dead; longer term if you aren’t growing someone eats you.”
Twitter angles for a buyout
There have been a lot of rumors about a possible bid for Twitter so far this year, but no deal has emerged as anything more than talk on Wall Street. Charlie Gasparino, who works for Fox Business News, has said more than once that the firm’s leaders are open to a sale. There don’t seem to be too many buyers just yet.
Yelp Inc, another firm that has fallen into Cramer’s dead zone, put itself up for sale earlier this year, but called it off after the firm’s CEO Jeremy Stoppelman had a change of heart. Rumors suggested that a lack of willing buyers was the real problem for the firm.
As Twitter’s value falls, however, the prospect of another firm shelling out to buy it improves. Twitter is not growing its user base any more, and the firm’s CEO Jack Dorsey warned in the July 28 earnings call that the firm would take quite a while to turn around.
Mr. Cramer seems to be of the opinion that the best way to turn around would be to give up independence. If Twitter growth stays slow and the firm shows little chance of turning around, a buyout becomes akin to a “mean time to happen” event. It may never happen, but the longer it stays in that state the more likely it becomes.
Twitter blues burst stock
Wall Street was sullen about the numbers Twitter released on Wednesday 28. RBC Capital analyst Mark Mahaney said, in a report on the firm, that “Twitter’s lack of realtime commercial intent or detailed, authenticated profiles will eventually limit TWTR’s growth potential.”
Victor Anthony of Axiom Capital Management expressed doubt about Twitter’s growth plan, even with new products like Project Lightning on the way. He says that in the market “confidence in that working is no longer there and that’s probably why you’re seeing the reaction.”
Shares in Twitter lost more than 14 percent of their value on Wednesday, and the firm is now worth less than $24B. Though Google is not interested in buying the firm, there are many other concerns out there that may want to purchase Twitter.
Jim Cramer thinks that a buyout is very likely to happen if Twitter is not able to raise its growth prospects. Those with shares may be hoping for just that in order to get something from the money they put into the firm.