Twitter investors may have lost their confidence in the company, but the recent sale of LinkedIn to Microsoft could give them a strong ray of hope. On Monday, after the news that LinkedIn was sold to Microsoft for over $26 billion, Twitter’s stock went up by more than 8% in early morning trading.
Why did Twitter go up on the LinkedIn sale?
Twitter’s stock went up because investors are hoping that just like Microsoft acquired LinkedIn for a massive amount, there could be a company interested in buying Twitter as well, says Re/code. For a long time, there have been speculations that a major tech company such as Google or Facebook or even Microsoft might buy Twitter.
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The fact that Twitter’s stock is down nearly 60% from what it was a year ago when then-CEO Dick Costolo announced his departure makes its acquisition almost inevitable. Therefore, it can be said that the recent LinkedIn acquisition has done more for the micro-blogging firms stock than its CEO Jack Dorsey.
The stock’s move is typical investor arbitrage, but if Twitter shares remain at high level, it is a clear signal that soon it will be in someone else’s hands and investors will benefit from it, the report says.
Top contender for Twitter
Now the question that arises is which company would come forward to buy and save Twitter. It could be either Google or a bigger media player such as Comcast.
“But we talk with smart people close to Twitter often, and the growing feeling is that Twitter’s best option is to finally sell to someone with deep pockets,” says Recode’s Kurt Wagner.
Google appears to be the top contender. According to the head of equity at Saxo Bank, Peter Garnry, there are very few companies big enough to take over Twitter, with Google being one of them. Yesterday, the expert noted that despite stagnant user metrics, the company’s cash flow position has seen improvement recently, making it more appetizing.
Also Twitter has a deal with Google, giving its tweets greater prominence in Google’s search results. Also advertisers can now use Google’s DoubleClick Bid Manager and DoubleClick Campaign Manager to buy and measure campaigns on Twitter.
In pre-market trading today, Twitter shares were up by over 2%. Year to date, the stock is down almost 36%, while in the last year, it is down almost 60%. The stock has a 52-week high of $38.82 and a 52-week low of $13.73.