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Will Google Acquire Twitter? And Is Chris Sacca Right?

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In a report published Friday, Axiom Capital analyst Victor Anthony maintained a Hold rating on Twitter Inc (NYSE: TWTR), with a price target of $45, amid continued speculations of the company being acquired, saying that Google Inc (NASDAQ: GOOGL) could be a possible buyer.

"A week doesn't pass without this rumor hitting the press and certainly Sacca added to the speculation on a press appearance," analyst Victor Anthony said, while adding, "Our position is that acquiring Twitter would be a wise use of Google's capital given its failure to capitalize on the social media user time shift (we give them an A for effort, having tried 2x)."

Anthony noted, however, that Google acquiring Twitter was unlikely, at least in the near term. The search giant appears to be comfortable with its partnership with Twitter at this time. Moreover, Google's management has conveyed to investors that they are "looking to be more disciplined about their uses of capital."

Anthony believes that Twitter's near-term advertising pressures are "solvable," and the platform's monetization potential "remains intact." However, the company faces challenges in achieving user and engagement growth; and this is likely to continue for some time. The company has increased its focus on this with several product iterations.

"With that said, we think Chris Sacca's suggestions (outside of the obvious self-promotion of his portfolio companies) to drive engagement growth and time spent is spot-on in certain places and worthy of consideration by management. Despite the pullback in the shares we are maintaining our Hold rating until we see early evidence of a user and engagement fix (visibility remains low) as well as a fix to the recent monetization challenges," the report added.

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Posted-In: Axiom Capital ResearchAnalyst Color Reiteration Analyst Ratings


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