Shares of Twitter Inc closed up 7.31% on Wednesday on rumors that two billionaires wants to buy the social media company. The rumored buyers are former Microsoft CEO Steve Ballmer and Saudi Prince Alwaleed bin Talal. The company’s stock is up 7.25% in pre-market trading.
Twitter Acquisition Unlikely in 2016
According to the rumor, Ballmer and Prince Alwaleed bin Talal are joining hands for a bid to acquire Twitter at $22-$26 a share. Together, Ballmer and Al-Waleed own a 9% stake in the social media company.
Robert Peck, internet equity analyst at SunTrust Robinson Humphrey, told CNBC that he doubts the board of directors would be willing to sell the company. He said that the board is “100 percent behind CEO Jack Dorsey and his turnaround plans”.
In addition, Peck said that Dorsey himself might not be willing to sell now or anytime soon. He said that an acquisition of the company in 2017 “wouldn’t surprise” him. The analyst said that it’s too soon to give up on the turnaround plan.
The social media company “will eventually be an acquisition candidate, but it’s not likely in 2016,” Peck said.
Twitter Problems
Twitter shares are down nearly 21% for the year. The company’s quarterly sales fell short of expectations. The social media company beat analysts’ estimates for monthly active users in the second quarter. The company reported second-quarter total revenue of $602 million, up 20% year-over-year, missing analysts’ estimates of $607 million. Advertising revenue came in at $535 million, up 18% year-over-year. The number of total monthly active users increased to 313 million for the quarter.
In addition to its struggle to gain new users, Twitter has been hit hard with a string of executives leaving the company. In May, the company confirmed the departure of its two key executives.
To grow its revenues, Twitter Inc sees big advertising opportunities in live video streaming. Aside from sports events, the company is also planning to stream entertainment and political videos and shows. The social media company is working on a video ad technology. It wants to build a system that can accurately verify who saw video ads and allow advertisers to pick audiences and setup their campaigns.
Recently, the social media company inked a deal with Sky Sports to show Premier League football videos this upcoming season. The deal is part of the company’s plans to stream live events and shows and attract more users. Showing live events will help the company to boost its revenue by attracting video advertisers. Under the agreement with Sky Sports, Twitter will stream top-flight Premier League highlights and goals.
Banned Twitter user Milo Yiannopoulos, technology editor at Breitbart, accused Dorsey of using the network as his own “private fiefdom” to promote his own political agenda. “This utility, which is how Dorsey has always described it and how he’s wanted Twitter to be perceived, has always been run along party lines,” Yiannopoulos told CNBC. Yiannopoulos was banned from the social media platform last month for conducting and encouraging online harassment against Ghostbusters actress Leslie Jones.
Dorsey said during an earnings call that Twitter Inc is for “News and Social commentary,” but it will never be a platform that shows only a partial view of what’s going on. Harassment and abuse will never be allowed, the CEO said.
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