Twitter shares plummeted on Thursday, causing the company to shed $2 billion in market cap, as investors finally began to consider that perhaps this time won’t be any different after all. Maybe a suitor can’t be found for Twitter, and all the positive sentiment around a sale is misguided. The considerations come as multiple reports suggest that Alphabet, Apple, and Walt Disney probably won’t be making a bid for the micro-blogging platform. Commentary from Salesforce management also suggests that they aren’t very interested in owning the social network either.
Twitter shares tanked 20% on Thursday in ridiculously heavy trading. By the end of regular trading hours, roughly 102.5 million shares had changed has, compared to the average daily volume of 34.15 million shares.
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Alphabet or Apple most likely to buy Twitter?
Former Yahoo interim CEO Ross Levinsohn told CNBC on Wednesday that Google or Apple will be the most likely candidates to buy Twitter. For Apple, he said the social network would fill the lack of a news-type platform, while for Alphabet, it would create the third prong of an internet empire in the form of Google, YouTube and Twitter, which he called a “media trifecta that would excite consumers.”
The company’s market cap was at around $17 billion when the former Yahoo exec spoke, but it had fallen below $15 billion by Thursday afternoon. Levinsohn pegged the buyout value at around $20 billion, which he said is out of the reach of a company like Salesforce, which was reported to be interested. Not only would Salesforce with its $45 billion market cap struggle to come up with the cash to buy Twitter, but he said its smaller size means it can’t really afford to take a chance on a “damaged” asset such as Twitter.
He doesn’t believe Walt Disney would shell out $20 billion for it either.
Google, Disney don’t want Twitter
Twitter is apparently in a hurry to strike a deal, as Reuters reported that it told interested companies that it wants to conclude the negotiations by the time it releases its third quarter earnings report on October 27. The media outlet cited unnamed sources for the information. The sources also said that the company had cut down the number of interested parties to Salesforce, Alphabet and Walt Disney.
However, Recode reported later that neither Alphabet nor Walt Disney would bid for Twitter. The website also said Apple is unlikely to make an offer, leaving Salesforce as apparently the only interested party. Recode emphasized that the social network is indeed for sale and that Disney had been considering making a bid.
What about Salesforce?
Salesforce CEO Marc Benioff addressed the Twitter question when speaking to analysts at a special Q&A session. Most of the questions were focused around the possibility of a bid, and UBS analysts noted that one question that stood out to them was about the importance of deferred revenue. Benioff likes deferred revenue quite a lot, but the micro-blogging platform has very little of that to offer, which makes it seem less likely that the company will make a bid for it.
The Salesforce chief said that deferred revenue was a key part of their attraction to LinkedIn, which of course they lost to Microsoft. LinkedIn had $786 million in deferred revenue in the second quarter, compared to $933 million in reported revenue, UBS analyst Brent Thill. Twitter, by comparison, had only $25 million in deferred revenue against its $602 million in reported revenue.
Jefferies analyst John DiFucci highlighted comments from Benioff about Salesforce not being interested in acquiring mass amounts of data, which appears to refute the many analyst reports that suggested the company could benefit from Twitter’s data.
However, Seeking Alpha contributor Nima Karamlou said on Thursday that he feels Salesforce will buy the micro-blogging platform “now that price has become less of an issue.” He believes Benioff is the guy who will be able to unlock the value he sees in the platform.