Shares of Twitter Inc. (TWTR:NYSE) soared more than 7 percent on Aug. 3, on takeover rumors. According to media reports, large stakeholders including Microsoft Corp.’s former CEO Steve Ballmer and Saudi Arabia’s Prince Alwaleed bin Talal could be interested in buying the social network.
Trading volume went up from a daily average of 24 million shares to 55 million shares. Robert Peck, internet equity analyst at SunTrust Robinson Humphrey, told CNBC that Twitter’s board of directors would not be willing to sell the company at this stage. Peck said the board is “100 percent behind CEO Jack Dorsey and his turnaround plans.”
Twitter’s stock took another hit after the company announced second-quarter results on Jul. 26, showing disappointing user and advertiser growth and a weak outlook.
The stock lost more than 60 percent since its initial public offering in 2013, making it more attractive for potential buyers.
The 10-year-old messaging platform slightly missed estimates on revenue, growing only 20 percent year-on-year in the second quarter compared to 36 percent growth in the first quarter.
Advertising revenue, which is the company’s most important revenue segment deteriorated significantly. The management’s third-quarter guidance suggested that recent challenges are likely to remain.
Goldman Sachs stated in a report that Twitter has multiple avenues for new revenue as well as the potential to be acquired by another company, which makes the company attractive for investors.
Giant tech firms like Google, Facebook, or Apple could be logical buyers of Twitter, according to the CNBC report.