Twitter sale talk sees shares lift
CHATTER about a sale of Twitter is intensifying amid sputtering efforts to transform the one-to-many messaging platform into a profitable business.
Twitter shares soared 21.45 percent on September 23 to close at US$22.62 on unconfirmed media reports of a potential sale, with Alphabet-owned Google and Salesforce named as possible suitors.
The share price gave the company a market value of $16.13 billion, still well below the $26 level when Twitter made its stock market debut in November 2013.
The market action came after a report by CNBC television that Twitter’s board was favouring a sale.
The Wall Street Journal meanwhile reported that cloud computing group Salesforce was considering a deal, and the news site TechCrunch said Microsoft and Verizon may also be interested.
The technology news site Recode said Twitter was seeking up to $30 billion, which could limit the number of bidders.
Reports have been circulating for weeks that the popular messaging platform was opening its doors to potential buyers.
“Twitter has been positioning for sale for some time,” technology industry analyst Rob Enderle of Enderle Group told AFP.
“The problem is, since they are not profitable, finding someone to actually pay money for them.”
Google and Salesforce were considered prime suitors for Twitter. Microsoft and Verizon were also on the list of potential buyers.
“Google and Salesforce could justify the purchase,” Enderle said.
Google could benefit from Twitter’s strength in online social networking, but would likely face regulatory challenges in an array of countries.
Analysts have long maintained that Twitter needs to find new ways to boost its appeal beyond a core of celebrities, politicians and journalists, with its user base stagnant for the past year.
In its last quarterly update, Twitter said the number of monthly active users edged up to 313 million, up 3 percent from a year ago and only slightly more than the 310 million in the prior quarter.
Twitter has yet to post a profit, even as it has ramped up its efforts in advertising.
Twitter this week eased a 140-character limit on tweets, which was put in place due to mobile phone text messaging constraints when Twitter launched in 2006.
Twitter has also been striving to drive growth by streaming live video on its platform.
Analysts remain cautious about Twitter’s ability to break out of its rut and accelerate growth. It is far behind Facebook, which has an audience of over 1.7 billion, and Facebook-owned Instagram, with some 500 million.
Last month, eMarketer said Twitter’s share of US social network users will decline to 28.1pc this year and will continue to drop as it loses users to Snapchat, Instagram and messaging apps. –