Twitter Inc (TWTR) sale this year? Don’t Hold Your Breath: Analyst
Shares of Twitter Inc closed up 7.31% on Wednesday on rumors that two billionaires would buy out the social media company. The alleged buyers are former Microsoft CEO Steve Ballmer and Saudi Prince Alwaleed bin Talal. The company’s shares are up 7.25% pre-trade.
Twitter acquisition unlikely in 2016
Rumor has it that Ballmer and Prince Alwaleed bin Talal are joining hands in an attempt to acquire Twitter at a price of $ 22-26 per share. Together, Ballmer and Al-Waleed own a 9% stake in the social media company.
Robert Peck, Internet equity analyst at SunTrust Robinson Humphrey, said CNBC that he doubted the board of directors was prepared to sell the business. He said the board was “100% behind CEO Jack Dorsey and his turnaround plans.”
Additionally, Peck said Dorsey himself might not be willing to sell now or anytime soon. He said that an acquisition of the company in 2017 “would not surprise him”. The analyst said it was too early to abandon the recovery plan.
The social media company “will eventually be an acquisition candidate, but that’s not likely in 2016,” Peck said.
Twitter shares are down nearly 21% over the year. The company’s quarterly sales fell short of expectations. The social media company beat analyst estimates for monthly active users in the second quarter. The company reported total second-quarter revenue of $ 602 million, up 20% year-over-year, excluding analysts’ estimates of $ 607 million. Advertising revenue was $ 535 million, up 18% year-over-year. The total number of monthly active users rose to 313 million for the quarter.
To increase its revenue, Twitter Inc sees great advertising opportunities in live video streaming. Besides sporting events, the company also plans to broadcast entertainment and political videos and shows. The social media company is working on video advertising technology. He wants to create a system that can accurately verify who has viewed video ads and allow advertisers to choose audiences and configure their campaigns.
Recently the social media company signed an agreement with Sky Sports to show Premier League football videos this coming season. The deal is part of the company’s plans to broadcast live events and shows and attract more users. Broadcasting live events will help the business increase revenue by attracting video advertisers. As part of the deal with Sky Sports, Twitter will broadcast the best Premier League moments and goals.
Milo Yiannopoulos, chief technology editor at Breitbart, accused Dorsey of using the network as its own “private fiefdom” promote its own political agenda. “This utility, which is how Dorsey always described it and how he wanted Twitter to be perceived, has always been run according to party principles,” Yiannopoulos told CNBC. Yiannopoulos was banned from the social media platform last month for leading and encouraging online harassment against Ghostbusters actress Leslie Jones.
Dorsey said on an earnings call that Twitter Inc was meant for “Social News and Commentary,” but it’s never going to be a platform that only shows a partial view of what’s going on. Harassment and abuse will never be allowed, the CEO said.