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Google Is 'The Only Potential Acquirer' Of Twitter As Social Media Boom Nears End

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Google Is 'The Only Potential Acquirer' Of Twitter As Social Media Boom Nears End

Shares of Twitter Inc (NYSE: TWTR) soared higher by more than 20 percent on Friday following a report which suggested the company is nearing a deal to sell itself to salesforce.com, inc. (NYSE: CRM) or Alphabet Inc (NASDAQ: GOOG).

According to Trip Chowdhry of Global Equities Research, Google is "the only potential acquirer" of Twitter and timing of any deal is "critical."

Chowdhry suggested the social media space is "reaching the tail end" of a boom cycle and a startup bubble will begin to burst in March or April of next year. These two events will merely "depress the social media company valuations."

Related Link: Buyer Beware: Oppenheimer Downgrades Twitter, The 'Sixth-Best Social Media Platform'

As such, Google shareholders are hoping the company "is not stupid" to bid for Twitter at any point throughout the remainder of 2016. On the other hand, Twitter shareholders are hoping a deal is announced this year ahead of the bubble burst and a deal to sell itself could be done in the early $20s.

However, once the bubble starts bursting, Chowdhry argued it will be "very difficult" for Twitter to sell itself at even $10 per share.

"It is in the interest of Google to look at Twitter acquisition only after the startup bubble bursts in early 2017," the analyst emphasized.

Strength And Weaknesses

Google could be interested in Twitter because the company is:

  • The best discovery and amplification platform
  • An ideal platform for breaking news
  • An ideal platform for politicians and celebrities

Interestingly enough, Chowdhry also argued that a Donald Trump White House victory would serve as a "clear validation that 140 characters is mightier than $140 million."

On the other hand, the analyst pointed out several weaknesses in Twitter's business

  • Conversations on Twitter are often full of hate and bullying
  • Users having more than one login is "rampant"
  • Buying followers on Twitter from people in third world countries lead to inflated numbers.

Latest Ratings for GOOG

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Oct 2019MaintainsBuy
Oct 2019MaintainsBuy
Oct 2019MaintainsOutperform

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Posted-In: Global Equities Research Trip Chowdhry twitter Twitter BuyoutAnalyst Color Top Stories Analyst Ratings Tech Best of Benzinga

 

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