Why Accepting A Buyout Could Be 'The Worst Mistake' Twitter Could Make

On Monday’s PreMarket Prep, Quantum Trading Strategies CIO Sean Udall discussed the seemingly nonstop stream Twitter Inc TWTR buyout rumors. According to Udall, Twitter is nowhere near fully valued in the market, and a buyout at a price less than $35 per share may not be in the company’s best interest.

Twitter shares are up 48.1 percent in the past six months on buyout speculation, but Udall believes they still have a long way to go before they accurately reflect Twitter’s true long-term value.

Related Link: Here Is Every Twitter Takeover Rumor Of 2016

“I’m not so sure Twitter ever really gets bought out, and I’m pretty sure Twitter never gets bought out for a fire-sale price,” Udall told Benzinga.

Udall went on to explain that a reasonable buyout offer for Twitter would be somewhere in the $30 billion range, or $42 per share.

“I can get to $30 billion about four or five different ways, and that’s not even a stretch,” he added.

Udall explained that, while no buyers seem to be willing to step up to the plate on Twitter, a number of companies wouldn’t want Twitter’s valuable data falling into the hands of a competitor. He argued that Twitter data is a valuable asset for International Business Machines Corp. IBM’s Watson, as well as Alphabet Inc GOOGL and Microsoft Corporation MSFT’s search engines.

“I actually think the worst mistake for Twitter would be to sell now because user growth isn’t going to get any worse, they’ve got initiatives that are working, and you’ve got more people starting to figure out that Twitter’s actually really valuable,” Udall concluded.

PreMarket Prep is a daily trading ideas show that focuses on technical analysis and actionable short term trades. You can listen to the show live every morning from 8-9 a.m. ET here, or catch the podcast here.

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