After Twitter’s board met on Thursday, it told CNBC that there were “no bids on the table” and that instead it was exploring cost cuts — an announcement that drove another sell-off in the stock and pushed it down 6 percent.
On Friday the shares were changing hands at about US$18 — 20 percent down this year and well short of their float price of US$26 three years ago.
Twitter has never made a profit since going public in November 2013. A month later its shares hit an all-time high of US$69, but have steadily declined since, while losses have worsened. It is unlikely to go bust, having a cash pile of US$3.6 billion.
However, in financial circles the feeling is that Twitter’s time as an independent entity is running out, because shareholders want to see growth and profit.
Twitter has to figure out what it wants to be, Wedbush Securities analyst Michael Pachter said.
“They should want to be the first source of news. Their addressable market is the 2.5 billion people on the Internet who want to know about anything,” he said.
In his view, “there’s only one strategic buyer, and it is Facebook. [Twitter is] instant news, and that’s the one element that Facebook is missing. I think Facebook really wants to be a media company, and that’s the one element of media that they’re really sorely lacking.”
If not Facebook, what about Google? That idea has been around since 2011. Certainly, owning Twitter would bring Google closer to its mission “to organize the world’s information and make it universally accessible and useful.”
Ben Thompson, an independent technology analyst who writes the Stratechery blog, thinks it makes perfect sense. Google badly needs a compelling product used daily on mobile platforms.
However, as Thompson told in a recent newsletter to his subscribers, Twitter signed up last year to use Google’s DoubleClick advertising platform and give the search engine access to the “firehose” of every tweet as they happen, to roll into search results.
“This, effectively, eliminated the top two reasons for Google to buy the company,” he said.
Microsoft’s purchase of LinkedIn for US$26.2 billion in June might have heartened Twitter shareholders, but the two companies look very different: LinkedIn makes money, and is comparatively orderly.
Twitter, by contrast, is trying to fight longstanding problems with abuse by its users, while also seeking a feature that cannot immediately be copied, and then executed and monetized better.
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