Twitter California-based shares edged higher during the course of Friday’s session after reports showing that the company is anticipated for a sale, with sales force and Alphabet among potential suitors.
As shares of Twitter hit 21.5% higher at the close of trade, several market participants suggest that a buyout is already priced in, which could disappoint potential buyers or even affect the offered premium, if a buyout is really on the cards.
Subsequently, investors believed a greater downside risk is a concern compared to the current potential upside.
Buyout Price Estimate
Microsoft acquired LinkedIn for $26.2 billion in June last year, which paid a premium of nearly 50% over its valuation. Twitter’s reasonable price estimation seemed to be the closest to this, citing there are other cases like Facebook acquisition of WhatsApp, defying conventional valuation logic.
Snapchat Boost Twitter?
Analysts believe that only one potential buyer could bring back Twitter on the line, and is no other than the famous perplexing youthful network for face swap and turning people into grapes.
Snapchat turned innovation in a better perspective and has caught users 30 and under. With that crowd and its exceptional spending power would suggest a robust shot in the arm of the microblogging site that has been struggling with a sluggish advertising growth and flat base of users.
However, Twitter finds support on the recent leaked rumors of an acquisition this year. Shares of the social media giant show significant rally in each acquisition discussion it has been generating, citing the recent reports after claiming that Salesforece.com and Google are joining in.
Current Stance of Shares
The chart below illustrates the current stance of TWTR stock’s movement after the leaked rumors of an acquisition, sending shares higher. Meanwhile, market participants were given a signal to perform Buy position on the previous third candle, which in fact did strongly rallied by passing three resistance lines.
In essence, stock prices rebounded and skyrocketed from 18.55 to 22.88 with a 4.33 basis points on September 23 between resistance 22.87 and support 21.13, after reports claimed that Twitter has hired Goldman Sachs to advise it on a sale, considering Twitter CFO Anthony Noto is a former employee at Goldman Sachs.
The strong rally was added by Google parent Alphabet after it has been mentioned several times as a logical suitor, considering Twitter chairman Omid Kordestani is a former executive at Google.
Thus, buying Twitter is a strong point for Google to compete well with Facebook in the social media realm.
Moreover, it was reported on Friday that Google was indeed interested in Twitter, but Salesforce.com – a business software company is also looking forward to acquire Twitter, citing it still unclear of how Twitter would benefit with the said acquisition.
Given these important and headline acquisitions of Twitter, it is expected that it will really give a huge boost on the company’s share and is open for bigger opportunities with the named suitors, sending investors to closely watch on the stock.
Hence, we conclude that shares will continue to rally until the leaked acquisitions were ended or accomplished.
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