Twitter Spikes Up More Than 8 Percent On Fake Takeover Report, SunTrust's Bob Peck Weighs In

Shares of Twitter Inc TWTR spiked up in the afternoon on Tuesday by more than 8 percent on a fake report that the company has received a takeover bid.

Bob Peck, SunTrust managing director, was on CNBC recently to discuss why he thinks that the report was a mere rumor and the company is not a takeover target as of yet.

Reasons For Not Being A Takeover Target

"We don't think that it's likely and there is a couple of reasons why," Peck began. "One is if there were a potential deal on the table, we don't think they would have gotten through this whole CEO transition. Number two, we think the Board and the company think the stock is worth more than where it is today, you are selling at recent lows here. And they are just starting to roll out new products they think will [hit] and therefore will drive the value up."

He continued, "Also if you look at the premium side in the article, it's only a 20 percent premium. So, why would you take that her, especially if you are rolling out new products. We talked [...] industry contacts they don't think it's that likely. And even Anthony Noto, the CFO, said recently at a conference that they have not hired bankers. So, we don't think the report is likely."

Caution Ahead

On the stock moving above its 50-day moving average, Peck said, "I think a lot of clients here are looking to see if the stock has bottomed out here. The expectations for Q2 are about as low as they can go and we have cautioned investors on two things. One is, we don't know [if] the user metrics [...] could actually decline for the first time ever. And number two is the guidance could also be weak if they are going through this transition."