Media

Alphabet, Facebook, IBM: Who Might Buy Twitter?

Mayer Winkler

Published: February 5, 2016 7:05 am

Last Updated: January 13, 2020 1:36 pm

With next week’s earnings report from Twitter Inc. (NYSE: TWTR) expected to be dismal, the stock looks unlikely to reverse to the upside, and it could easily continue its downtrend since its initial public offering back at the end of 2013. Twitter currently trades at a little over $16 a share — 69% off 2015 highs and 77% off all-time highs — and the company’s inability to effectively monetize its user base is leading analysts to question its future. Specifically, whether the company would benefit from being bought out and, if so, who would make the ideal suitor?

Is a buyout possible? In a word, yes. Twitter shareholders are putting pressure on the company to deliver, and this is limiting the company’s ability to experiment with alternative revenue sources. If Twitter were part of a larger organization, it could shift its focus from advertising, a space in which it is already reaching top end barriers, and focus on things like data monetization or commercial licensing.

So what would be a good company to take Twitter under its wing?

One of the most widely touted suitors is Alphabet Inc. (NASDAQ: GOOGL). Alphabet has enormous cash reserves, $73 billion at latest count, and could afford to pay a 100% premium without breaking a sweat. Many will argue that Twitter has no real value for Alphabet since the social network is very unlikely to catch up to Facebook on almost any metric, and Google already fought, and lost, in the social media space with Google+.

In reality, however, Twitter’s strength isn’t as a social platform; it’s in its ability to aggregate data. Real-time access to the data that Twitter creates could seamlessly integrate with Google’s tailored advertising approach.

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