Twitter Inc (NASDAQ:TWTR) saw its shares spike 20% on Friday. After reports suggested that the social network was being eyed by Alphabet Inc (NASDAQ:GOOGL) and Salesforce.com, inc. (NYSE:CRM), traders hit the buy button. It is being reported that the social media outlet will receive a formal bid soon from an array of tech and media firms. Is there still enough strength in the Twitter brand?
Twitter Inc Targeted by Google, Salesforce
Twitter could soon have different owners. The tech firm is in talks with several companies about a possible sale. This comes as both welcomed news and relief for the struggling social media outlet.
The potential list of suitors primarily include Google and Salesforce. Other reports had listed Verizon as a potential buyer, but it quickly shot down those rumors, noting that it hasn’t submitted a bid. The firm will soon release the list of those interested in acquiring the company.
Twitter is reportedly working with Goldman Sachs and Allen & Co to work on the deal.
Experts are puzzled by Salesforce’s decision to bid for the company. It has been described as “unexpected” since it has zero footprint in consumer media. Some believe that the artificial intelligence (AI) platform may have to do with its apparent interest in Twitter. The AI platform utilizes tweets to highlight how brands are viewed by the general public.
In regards to Google, some feel that it’s a more logical route. The search engine has been unable to make Google+ a dominant force in the realm of social media. This way it can integrate its search engine with social media without launching a new brand.
Earlier this month, Twitter’s board had met in San Francisco to discuss a potential sale. Twitter has been in a downward spiral. Last year at around this time, Twitter reduced its workforce by eight percent. Although the board hoeed that CEO Jack Dorsey could rejuvenate the company, it hasn’t been able to expand its userbase. Despite the various changes, the platform’s growth has remained the same.
The estimated market value of the acquisition is between $14 and $16 billion.
Buyers Have Much to Gain from Twitter Inc Buy
Some financial experts argue that Twitter’s market value isn’t worth it. Others say that any potential buyer would gain a lot from the deal, particularly the treasure trove of data within the Twitter arena.
With 500 million users, that is a lot of personal data. In addition, there is an enormous amount of data pertaining to tweets, followers and connections. This is data that advertisers and marketing departments would love to have. Since Salesforce couldn’t snatch LinkedIn Corp (NYSE:LNKD), Twitter could be the next best thing.
Here is what Salesforce.com’s chief digital evangelist Vala Afshar tweeted out on Friday:
1 personal learning network
2 the best realtime, context rich news
3 democratize intelligence
4 great place to promote others
— Vala Afshar (@ValaAfshar) September 23, 2016
Whether it’s Google or Salesforce, whoever buys Twitter will have a long to-do list in the near future.
Twitter is known for its users utilizing the platform to complain about something they’re offended by or to capture 140 characters worth of the U.S. presidential election. But the firm is trying to expand its identity. It wants to be a content-rich outlet, which is why it entered into an agreement with the NFL to livestream football games.
It will be up to the new owners if they want to continue down this road. There aren’t enough data to suggest that this new initiative is working out or growing its users.
“The company aspired to be something which it was never able to become — namely, it wanted to be a ubiquitous utility that everybody used on a daily or more frequent basis,” Brian Wieser, an analyst at Pivotal Research Group, told Bloomberg. “The problem was that there was an assumption that everybody wanted what it offered — and that was the mistake that they made.”
Twitter reported second quarter losses of $106 million. Twitter shares have calmed down since before the weekend. It is up a tepid one percent at just under $23.