What would Twitter’s suitors get for $20 billion?

Annie Baxter Oct 5, 2016
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Andrew Burton/Getty Images

What would Twitter’s suitors get for $20 billion?

Annie Baxter Oct 5, 2016
Andrew Burton/Getty Images
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COPY

Update: After this story was published, Recode reported Google would not be bidding for Twitter and Apple was unlikely to. Twitter shares dipped in after-hours trading.

Several media reports are fueling speculation that the troubled social media giant Twitter is an acquisition target. Its bidders allegedly include Salesforce.com, which sells online software for sales and marketing, along with Alphabet Inc.’s Google and Walt Disney Co. 

The Wall Street Journal said the cost of acquiring Twitter could run upwards of $20 billion.

Twitter is struggling to keep up growth of new users. But it still has hundreds of millions of monthly users. And analysts say one of Twitter’s greatest assets is the data it collects on them, based on what users tweet or who they follow.

“They’re in a position to know what kind of movies you like, what your hobbies are, whether you’re interested in skiing or cooking, for example, and even what your political beliefs are,” social media marketing consultant Josh Bernoff said.

Salesforce.com, reportedly Twitter’s leading suitor, is already making use of the social media site with one of its analytics tools. It helps corporate clients track what is said about them on Twitter so they can respond.

“So it’s very reactive analysis being done right now,” Jeremiah Owyang said, founder of Crowd Companies. “In the future, they could generate even more in-depth reports that could predict what people are going to say and do and try to get in front of them and influence them.” 

Macquarie internet analyst Ben Schachter said he’s skeptical about the legitimacy of the acquisition rumors, which so far only come from media reports. 

But Schachter said a company like Google might be looking at Twitter and saying, “All right, there’s some really interesting data here. There’s also this massive advertising opportunity.” 

He said Google could potentially plug its advertisers into Twitter and boost ad distribution. Disney, on the other hand, might see an opportunity for greater content distribution.

But some analysts question whether Twitter’s assets really are that valuable. Trip Chowdry with Global Equities Research noted that users can be anonymous and may misrepresent their interests.  Or users might be completely fake. “The inferences you make out of the data that Twitter has could lead to false conclusions,” he said. 

Chowdry added that Twitter is facing stiff competition from many other social media companies. He said any firm looking to acquire it might want to wait for a steep discount, which he said could come as early as next year.

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