Over the past number of weeks Twitter stock has been plunging lower and lower breaking new record lows that they never wanted to break. However, Monday morning saw Twitter stock rally back and surge up more than 6%. The reason for the turnaround? Marc Andreessen – a prolific tweeter – may want to team up with private equity firm Silver Lake to buy the company.
It is clear that Wall Street seems to think this is the best option, at one point yesterday the Twitter stock was up over 11% and finished up around 10%. Andreessen has teamed up with Silver Lake before when they bought a majority stake in Skype in 2009 before later selling it on to Microsoft.
It is unclear if these are simply wishful rumours or if there may be something more of substance behind them. However, when CNN reached out to the parties concerned nobody was available for comment.
Unless Twitter unexpectedly wows investors with better than expected user growth during the February 10th earnings report then we can expect the takeover rumours to continue. While Twitter stock may have rallied, it is still down more than 20% in this year alone and down 30% on its initial public offering in November 2013.
Twitter investors seem desperate for something, anything to ignite the fire. There has been multiple rumours such as Google taking over Twitter, every now and then an activist shareholder seems to jump into the mix and even News Corp was mentioned recently.
Despite News Corp denying the rumours straight away, the stock rallied anyway. A sniff of a rumour at the moment is enough to send Twitter stock soaring upwards. Twitter is loved by the dedicated hardcore fans, I absolutely love Twitter. It is my favourite social platform to connect with others and grow my network so its understandable that many loyal users are concerned about the company’s future.
CEO Jack Dorsey needs to come up with a way to attract more users and stop the rot in Twitter stock, otherwise Twitter could easily end up as another Myspace. Remember Myspace? Just about! While Twitter has a healthy amount of cash at the moment and is nowhere near about to fall over and die just yet, my firm belief is that the future for this company in terms of growth and stability is for someone to come in and buy it.
Personally, I feel that Twitter going private and getting away from the ruthless shareholders and investors could be what turns the company around for the better.
Alternatively, all is not lost and companies have rebounded on Wall Street and come back stronger than ever before. Facebook stock took a massive plunge when it first hit the market in the summer of 2012. Facebook was absolutely hated on Wall Street when they first started trading however that sentiment didn’t last long.
Facebook was able to bounce back because they quickly responded to Wall Street’s biggest criticism which was that Facebook did not have a good enough mobile presence. Jack Dorsey and Twitter will now have to do the same, though their challenge is a little tougher – find a way to expand and grow the service quickly. Time will soon tell where Twitter ends up going next.