Twitter Inc (NYSE:TWTR) may have lost another bidder, and it could be because of a company that has nothing to do with it: LinkedIn. On Thursday, Mad Money host Jim Cramer said that if the talks for Salesforce to acquire the micro-blogging giant have been called off, it has nothing to do with Twitter Inc (NYSE:TWTR) itself.
How LinkedIn (LNKD) enters the picture
“It had to do with LinkedIn, specifically the breakdown in LinkedIn’s stock from $205 at the beginning of February down to $100 a week later, when it collapsed on really terrible guidance after an OK quarter,” Cramer said.
Abacab Fund Sees Mispricing In Options As Black-Scholes Has Become “Inadequate”
Abacab Asset Management's flagship investment fund, the Abacab Fund, had a "very strong" 2020, returning 25.9% net, that's according to a copy of the firm's year-end letter to investors, which ValueWalk has been able to review. Commenting on the investment environment last year, the fund manager noted that, due to the accelerated adoption of many Read More
One of the few remaining publicly-traded companies in the social, mobile and cloud space was LinkedIn. Marc Benioff, chief executive of Salesforce, understood that a company like LinkedIn could have important and valuable data, which is the new currency in the tech industry now. Benioff was, hence, interested in purchasing LinkedIn when its stock declined; however, Microsoft wanted it too.
Cramer said that once the price tag went to $26 billion, Benioff was not willing to get into a bidding war. On Wednesday, Benioff told Cramer that he would have loved to acquire LinkedIn because of its great deferred revenue. The Salesforce CEO was also concerned about what Microsoft would do with LinkedIn’s data. Now he is looking to buy Twitter Inc (NYSE:TWTR), and on Thursday, its shares dropped 20% to $19–well below their $74 price tag at the end of 2013.
According to Cramer, Twitter Inc (NYSE:TWTR) could have asked for a $29 per-share price tag. Though it is a lot, Benioff considered it, but shareholders’ retaliation in dropping Salesforce’s stock could have cooled Benioff’s interest in working on the deal further, Cramer said.
“Paying north of what Microsoft paid for the far more profitable LinkedIn, the price he needed to commit to in order to get Twitter’s board to sell, just killed the deal, especially because Salesforce execs were concerned that Twitter’s site has become too darned mean,” the expert said.
What makes Twitter (TWTR) a good buy?
Benioff, however, did see Twitter Inc (NYSE:TWTR) as a good fit. When asked about it during a panel discussion at the annual Dreamforce conference in San Francisco, Benioff said that one of the big trends he sees businesses going through is a shift from a traditional one-to-many model for customer service and marketing to a one-to-one model, in which businesses talk to individual consumers directly by using social tools.
Benioff said the ability to bring information directly to the consumer with intelligence built in is very powerful, and one could do that through various vehicles. “…you can see it happening through the Snapchats and Facebooks of the world, and even the Twitters,” he said.