Buying Twitter

January 9, 2016

Twitter has reach. It’s one of the most popular destinations on desktop and mobile. It’s ‘hot’ with ‘influencers.’ Its vox pop nature is important enough for the Library of Congress to archive it for future generations.

But it seems Twitter’s in trouble. They can’t get new users so they’re changing things up. Old users don’t like the changes and are disengaging. Coupled with Twitter’s ease of harassment, people are logging off.

Now Twitter’s buying nonsense commercials on TV to remind the world that they still exist. They’re basically ‘Can I Haz Cheezburger’ randomness set to dance music. I can only imagine how incomprehensible they are to TV’s older demographics.

Given the above, Twitter’s stock price has been in decline since its initial public offering in late 2013. And last Friday, January 8, 2016, it crossed below $20 for the first time.

Nice round numbers like $20 are called ‘psychological levels of support,’ and since Twitter broke it, investors who may have held at $20.01 might now sell.

Stock price chart
Twitter’s stock price over time

So since Twitter keeps just going down, lately I’ve been wondering who might end up buying it. There’s certainly no reason Twitter couldn’t stay a plucky little company, but tech loves consolidating behind majors.

Twitter’s currently worth is thirteen and a half billion, but ten sounds right for a buy today, right about five year’s current revenue. If you think they can keep growing their revenue like they are, then maybe the current share price would work for some hypothetical next year or two’s five-year’s revenue.

Facebook seems like an immediate fit since they rule social. And buying Twitter means they also get Vine and Periscope. In effect, Facebook’s stranglehold on mobile users’ attention would tighten.

Alphabet née Google doesn’t seem like a fit since their continuous attempts at social have failed, and given how often they shut their internal startups down, they probably have their hands full. But at the same time, they’re in an existential knot about mobile. Yes, Alphabet plays a major hand in Android, and they grab mobile users through that ecosystem and some sticky products like GMail, Google Docs, and Google Maps, but smartphone users spend most their time within social apps where Google Search, more or less Alphabet’s only directly profitable advertizing business, can’t reach them.

Apple doesn’t really make sense since they’re not a social company and historically they suck at the Internet. But the newly released Apple Music and now-deceased iTunes Ping have Twitterish tinges. Apple also in the last year or so started showing a greater presence on Twitter.

Microsoft doesn’t make sense. They’re in the middle of a restructure, trying to hit tomorrow’s target, cloud, more than today’s, mobile. I don’t see them making a bid, but then again I don’t understand why Microsoft still tries consumer ventures instead of focusing solely on enterprise. Enterprise can be sexy: Slack, Trello, Github. Microsoft should have made them before they made themselves, instead of making phones and games.

Before 2015, I would have maybe considered Yahoo, given their acquisition of Tumblr, but today Yahoo’s having trouble. Rumor says they’re considering selling themselves. Yahoo’s holdings in Yahoo Japan and Alibaba are worth more than Yahoo itself, so I suspect Alibaba may buy Yahoo, if for no other reason than to buy back Yahoo’s share of Alibaba.

Maybe Pinterest? Pinterest has some foot in the ‘influencer’ market. Users use it as a shopping list and follow curators who tell them what they should want to buy next. I see Pinterest sooner buying Etsy, though.

Maybe Snapchat? I can’t really gauge them well, but there’s some potential synergy between them and Twitter’s child companies, Vine and Periscope. But Snapchat might not have the cash at their size, making it an iffy all-stock purchase. Maybe instead Snapchat should offer to take Vine and Periscope off Twitter’s hands.

Maybe Amazon? I don’t know. They bought Twitch.

Some out of nowhere media-star-turned-tech-investor, like Justin Timberlake buying MySpace, JayZ buying Aspiro and turning it into Tidal, Ashton Kutcher, or Will.I.Am? Twitter lets media stars remind the world they still exist, and they love that.

Some more-traditional media group like News Corp or Condé Nast?

I think Jack Dorsey, Twitter’s new-old CEO, thinks he can turn it around, so I see him trying for another year or two. But after that, then what?

Does the state of Twitter herald the end of the second tech bubble?