For Twitter shareholders it may be easy come, easier go.
After TWTR’s stock soared during the past two weeks on news reports the company had hired Goldman to find a willing suitor, with substantial preliminary interest from a group of potential buyers including Google, Salesforce and Disney despite some stern warnings from the sellside, especially Citigroup, that a sale may be problematic at best, and fetch a far lower price than many had expected, last week Twitter shares tumbled after several reports that some of the more prominent buyers, such as Google and Disney, had gotten cold feet about the process and had backed out, but at least Salesforce still tentatively remain part of the process.
Twitter’s search for buyers began after several quarters in which sales growth and user growth slowed. The company received interest from one potential buyer, which led the board to hire Goldman Sachs Group Inc. and Allen & Co. to pursue a sale in September. CEO Jack Dorsey opposed a sale, while Williams, favored a deal, according to Bloomberg.
Now, according to a new report from Bloomberg, not only is Salesforce also out, but the Twitter sales process is all but dead “as top bidders lose interest amid pressure from their investors, according to people familiar with the matter.”
Citing “people”, Bloomberg reports that neither Google, nor Disney or Salesforce are likely to make a bid. On Friday. As confirmation that the process was unwinding, Bloomberg notes that “Twitter had planned to have a board meeting with outside advisers on a sale but canceled, one of the people said.”
Why the dramatic shift in sentiment?
“At Salesforce’s investor conference this past week, several investors talked to Chief Financial Officer Mark Hawkins and other executives about how they weren’t pleased with the idea of a Twitter buyout, according to another person familiar with the matter. They made their feelings known during small huddles near the stage and other areas around the meeting room. High-profile investors also e-mailed Hawkins, who forwarded the messages to his CEO and the board.”
As Citi and others explained in their warnings that the sale process would end in tears, buying Twitter would come with a series of complications. Beside the growth issue, the company has grappled with hate speech and harassment on its platform known for 140-character messages. A buyer would have to address heavy employee stock grants, while dealing with a workforce that has already faced a lot of turnover in its leadership.
What options are left for the suddenly unloved social platform? Among the far less palatable solutions for both the company and its shareholders, are divestitures of assets not central to its business, “people familiar with the matter have said.” More from Bloomberg:
If a buyer doesn’t appear, Twitter will continue to try to appeal to more users through a new strategy that emphasizes live video. The company has been entering partnerships for sports, politics and entertainment content — such as the National Football League’s Thursday night games — that it can stream alongside tweets related to the video. It may give people without Twitter accounts a new way to use the service, while allowing the company to share revenue on the video ads.
So far Twitter’s attempts to aggressively grow the business have failed, while complaints from its existing user base to cater to their far more modest demands, remain unheard which is why while Twitter will likely persist as one of the best platforms for news dissemination, its stock price may continue to suffer until it drops low enough that a buyer is ultimately interested. However, it will not be at Twitter’s Friday closing price of $19.85, which ultimately is good news for Deutsche Bank because no matter what happens to the German lender, it is unlikely that its market cap will be again eclipsed by that of Twitter.