With many on Wall Street anticipating an eventual sale of Twitter to a larger tech firm, news from Thursday’s company board meeting pushed those predictions aside for the time being.
With its growth numbers stagnant (up just 1 percent year-on-year as of last quarter) and nowhere near competitor Facebook’s profitability (losing $107 million on revenues of $602 million), shareholders are left scratching their heads.
Company representatives told CNBC that there were “no bids on the table” and that it is now exploring cutting costs, which caused the stock to plummet 6 percent. As markets closed on Friday, Twitter was trading at about $18, which is down 20 percent this year.
While the company struggles now to find a suitor, that doesn’t mean it won’t eventually be bought out … for the right price, that is.
The site still has 313 million monthly active users, with 21 percent of them coming from the United States. It continues to push for a video-heavy future as well, especially seen after reaching a live-streaming deal with the NFL to show Thursday night games on the platform.
But having never turned a profit in its history has kept potential buyers from seeing the social network as a sustainable news and communication social network.
As the Guardian pointed out, the company has a cash pile of $3.6 billion, so it’s unlikely to succumb to market pressures and declare bankruptcy anytime soon, and further falling share prices could change potential buyers’ minds on buying up Twitter. But without growth and profit, current investors are worried the company is falling short.
Market analyst Michael Pachter of Wedbush Securities told CNBC after the company’s board meeting that Twitter still has to figure out what it wants to be before being seriously considered for buyout.
“They should want to be the first source of news. Their addressable market is the two-and-a-half billion people on the internet who want to know about anything,” he said.
He further explained that in his view, one strategic buyer could be Facebook, as the social media giant is currently missing an element of instant news on its site.
“I think Facebook really wants to be a media company, and that’s the one element of media that they’re sorely lacking,” he told CNBC.
The Guardian reported that Ben Thompson, an independent technology analyst, said Google could fit as a potential buyer, as it “badly needs a compelling product used daily on mobile platforms.” There’s also potential for a buyout by a media company, like Rupert Murdoch’s News Corp, he said, but is a stretch given Murdoch’s unfortunate purchase of MySpace for $500 million in 2005.
Pachter told CNBC that while Twitter has potential, suitors would have to see real change before seriously considering buying up the property.
“I see [Twitter’s] model as being slightly broken and in need of a fix,” he said. “Give [co-founder Jack] Dorsey another year and let him fix it. If he doesn’t, get somebody who can.”