Well, it isn’t the freshest rumour around, but more recent speculation on a potential takeover bid by Google caused Twitter’s stock to rise almost 4.8%, ending on a 52 week high. It seemed that this followed recent gossip in the financial industry that Twitter had reportedly hired advisors from leading investment and consulting firm, Goldman Sachs, to help handle the bids.
Sharp Pitch for Stocks and Options
Companies at the forefront of the acquisition rumours are search engine giants Google and the ever diversifying Yahoo, who have both been involved in Twitter buyout rumours before. While Twitter stock values are quite high and they have a very active options markets, the surge was particularly noticeable after Twitter’s poor growth performance on the exchange last year, which pointed to possible stagnation for the social network, in terms of growing its active monthly users (the main driver of their ad revenue).
Theories for why Google would to acquire Twitter, and why Twitter would want to be acquired, are numerous and varied. Some have pointed to the data integration potential when combining the world’s most active social network with its most active search engine. However an earlier agreement had already pointed to greater cooperation between the two, in terms of indexing and processing tweets.
Others say it may be due to the apparent failure of the Google Plus social network, which has faced many accusations of being a “ghost town” in recent years, and was even recently instead referred to as ‘Google’s Photos and Streams’ by one of its executives. An acquisition like Twitter could bolster Google’s growth again, and get them back in the social market.
Past Acquisition Rumours
As exciting or devastating as you may find the above speculations, they are just that. Twitter has yet to respond to the rumours, which at the end of the day, are just based on the hiring of some financial advisors.
Twitter’s most recent valuation of $30 billion is significantly higher than any acquisition Google has made before. The company had approached the social giant in the past with a takeover bid, but it fell apart already during price negotiations, as did past offers from Microsoft and Facebook offers.
Should Twitter actually be looking to sell, it would purely be shareholder driven. It still performs incredibly well in terms of sales and active users, with only Facebook and YouTube as its rivals in the social market. But a publicly traded organisation’s business is to grow and diversify or it ceases to have value to traders.
And when you consider their already massive market share, lack of diversification options and the possibility of $30 billion retirement bonus, Twitter may find a buyout more tempting than it’s willing to admit at the moment.