Business in Tech

Here’s Why Twitter Should Consider Getting Sold

It’s not even been up to a month since news about a possible takeover of Twitter by the likes of Google made news headlines. That came as Twitter’s board met to discuss a range of issues around the micro blogging site and since then it looked as though it was all rumours after all.  

But just a few hours ago, CBNC reported that Twitter could actually be a few steps to being sold eventually. Possible buyers include Google, Salesforce and Rupert Murdoch’ News Corp. Apparently this made investors happy as Twitter shares surged on Friday on news that this could really happen.

“Twitter’s board of directors is said to be largely desirous of a deal, according to people close to the situation, but no sale is imminent. There’s no assurance a deal will materialize, but one source close to the conversations said that they are picking up momentum and could result in a deal before year-end.”

In 2013, Twitter was reportedly worth $40b but is believed to be worth about half that price today with some believing it’s even worth far lower than $20b.

But seeing as the deal could materialize at the end of this year, three months is a long time in business in that shares could rise dramatically or fall drastically.

While investors believe the company could make more money as a result of sales to a big name, others believe Twitter should put itself up for sale to salvage the brand. Remember Yahoo? The company used to be worth $128b but got sold for $4.8b and even that may be in jeopardy as a result of yesterday’s revelation that about 500 million user accounts may have been stolen in a 2014 hack. The story is not that different here and it goes thus;

  • Used to be worth higher in its hay days: like I said, Twitter used to be worth $40b and early this year they were worth about $10b which is 25 percent of their three year ago value. Yahoo used to be worth $128b too.
  • User growth became so slow suddenly: Yahoo saw a decline in the number of people actively using their accounts in a migration to other social platforms like Facebook. Remember Yahoo messenger?
  • Tried a whole of lot of initiatives to curb the trend to no avail: From a focus on videos (including live streaming by opening Periscope to all users) to removing the iconic 140 character rule in DMs, it hasn’t changed the company’s fortunes much. Yahoo bought Tumblr for $1.1 in 2013 to move to social media space. It also invested heavily in ecommerce giant Alibaba and let’s not forget Flickr in 2005 and that’s not to forget that Yahoo also acquired British mobile news aggregation app Summly for $30m in 2013. All of these didn’t really change the fortunes of Yahoo at least till date.
  • Appointed new CEOs to try and turn things around still to no avail: Twitter brought back Jack Dorsey after embattled CEO Dick Costolo stepped down last year. Marissa Mayer was appointed Yahoo CEO in 2012 to turn around an ailing internet company and not much has changed since then with respect to earnings.
  • Gave up and got sold eventually to bigger name: In the end Yahoo had only on option left and a merger was out of it. They got acquired eventually for $4.8b. The Yahoo and Twitter stories sound alike and now may be the time for investors to cash out of Twitter once a sale is finalised.

The saying is, there’s no smoke without fire and maybe it’s true in this case.