Twitter Stock Drops as Sale Looks Less Likely

Jamie McCarthy/Getty Images
Twitter CEO Jack Dorsey

The social network's stock was down 17 percent for the week of Oct. 3 as several potential bidders dropped out of the process and Salesforce investors questioned a deal.

Twitter's stock continues to sink as the struggling social network's prospects of a sale begin to wane. 

The San Francisco-based company became the subject of takeover rumors after it held a board meeting in September to evaluate some inbound interest. In the days and weeks that followed, several potential bidders emerged, including Salesforce, Microsoft, Google, Verizon and Disney. The speculation sent Twitter's stock soaring, at various points pushing its market cap above $20 billion.

The stock reached a 2016 high on Oct. 5, closing out the day at $24.87. It was the company's highest share price since Dec. 14, when it closed at $24.92. 

But the price began to decline last week after Recode reported that Disney and Google would not bid for Twitter, which has struggled to grow its users. Then, a new report from The New York Times on Friday indicated that investors were pressuring Marc Benioff, CEO of Salesforce, which has been considered the most likely to acquire Twitter, not to pursue a deal. It reported that mutual fund firm Fidelity Investments, Salesforce's largest shareholder with about a 14 percent stake, led the outcry. 

On Monday, Twitter's share price was down more than 13 percent during midday trading on the New York Stock Exchange. Friday's close of $19.85 represented a 17 percent drop in share price for the week of Oct. 3. 

MoffettNathanson analyst Michael Nathanson wrote in a report Thursday, the day after Disney and Google left the conversation, that the list of potential bidders for Twitter was small. "The lack of earnings per share and free cash flow amidst slowing growth and a high valuation creates a very big poison pill for most professionally-run companies to swallow," he wrote.

Nathanson also indicated that now would be the time to sell, writing "the timing could not have been better for Twitter as the company appears to be both running out of time and tricks." 

comments powered by Disqus