Stocks

Can Twitter Inc (TWTR) Find A Buyer?

Twitter Inc (NYSE:TWTR) keeps grasping at straws to try to save itself and now there’s some acquisition news about the struggling micro-blogging platform. The company is the acquirer instead of the one being acquired, as it shelled out $150 million for London-based machine learning startup Magic Pony. Investors cheered the acquisition, sending shares of Twitter up by as much as 2.55% to $16.49 on Monday following the news.

Can Twitter Inc (TWTR) Find A Buyer?

However, it’s looking more and more likely that Twitter will need to find a suitor for itself, with names like Google, Facebook and Microsoft being floated as good fits. But will the micro-blogging platform find any takers? Some think it will, particularly in light of the fact that Microsoft paid a sizable 50% premium for LinkedIn even though some see the social network as not being in a good position and believe Microsoft overpaid. Not everyone is convinced that the transaction means even Twitter will be able to find a buyer though.

Why there may never be a buyer for TWTR

In a post for ValleyBeat on FOX Business, Steve Tobak argues against Twitter Inc (NYSE:TWTR) ever being able to find a suitor. He notes that SunTrust analyst Robert Peck has been pushing for the micro-blogging platform to be acquired for years, even publishing a list of ten reasons Yahoo should acquire it in January 2015. Now he’s being less specific, although he thinks Google parent company Alphabet will buy it but not until next year at the earliest.

However, Tobak think no one should ever buy Twitter. In fact, “Nobody is that dumb,” he wrote, before launching into the many reasons he thinks it would be ludicrous to buy it.

For example, he noted that the company has a lot of internal problems, from a steady stream of executive departures to product continuity, user engagement, and retention problems. He also notes that the company is still losing money as stock-based compensation and other expenses weigh on it.

He also considered the names that have floated as potential acquirers for Twitter Inc (NYSE:TWTR), such as Microsoft, which doesn’t really need the micro-blogging platform because LinkedIn’s enterprise focus makes it a much better fit than Twitter would be. Facebook is already so popular that it doesn’t need to bring a struggling competitor under its umbrella, and Verizon is focused more on mobile and video, which are two areas the micro-blogging platform would not help it with. He also points out that Alphabet already gets to include tweets in its search results, so he sees no reason for it to buy Twitter.

Tempted to take over Twitter?

Gene Marcial of CBS Moneywatch takes up the other side of the argument, citing points from S&P Global Market Intelligence analyst Scott Kessler, who has a Buy rating and $21 per share price target on Twitter. He sees plenty of opportunities for Twitter to grow its user base and improve engagement and monetization. He doesn’t believe investors give the company enough credit for its brand, platform and history of mobile success. He also believes the markets have basically been ignoring the value of Periscope and Vine.

Kessler pointed out that data was a big part of Microsoft’s decision to buy LinkedIn, and he believes Twitter Inc (NYSE:TWTR) also has a lot of valuable data, which could make it very attractive to Alphabet. The analyst also believes the micro-blogging platform will finally shift into the green this year to earnings per share of 52 cents, compared to last year’s losses of 79 cents per share.