Anyone who listened to Mark Maheney’s downgrade of TWTR – noted earlier – and either sold or shorted the company overnight, is having an especially unpleasant day, because moments ago CNBC’s David Faber reported that the company is moving closer to a sale.
As Faber writes, TWTR has received expressions of interest from several technology companies and may receive a formal bid shortly, sources said. The social media company is engaged in conversations with potential suitors that are said to include Google and Salesforce.com, among other technology companies, sources said.
Twitter’s board of directors is said to be largely desirous of a deal, according to people close to the situation, but no sale is imminent. There’s no assurance a deal will materialize, but one source close to the conversations said that they are picking up momentum and could result in a deal before year-end.
While there have been many such rumors in the past, for now the market is going with it, and the stock is now up some 17%.
And now we wonder if RBC’s tech guru Mark Mahaney, who overnight slammed TWTR as we noted before…
Our broad concerns remain: 1) It’s not clear when/if product/UI changes can stabilize or reaccelerate User & Usage. 2) Channel checks and our last 4 surveys (and particularly our most recent referenced above) don’t provide convincing evidence that a substantial number of advertisers will commit meaningful $s to TWTR. Twitter believes it can command premium ad pricing, but its dramatic ad revenue deceleration doesn’t support that. We have believed that Twitter’s lack of real-time commercial intent (a la Google) and detailed, authentic profiles (a la FB) will eventually limit growth. That said, we could become more positive on Twitter if it shows meaningful traction with advertisers. Note our $14 PT is based on 3x P/S on ’17E Sales and 10x EV/EBITDA on ’17E EBITDA.
… will revise his assessment, and perhaps even downgrade FaceBook due to far more credible concerns of ad rigging.