Why Twitter Is Losing The Battleground And Bound To Be Acquired

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With stagnant user growth and continuing losses, it seems that an acquisition could only rescue Twitter management from its dilemma. Twitter’s board agreed last month to consider a sale, and has told potential acquirers it wants such deliberations to conclude by the time it reports third-quarter earnings on Oct. 27, Reuters reported.

Recently, Recode reported that Alphabet Inc’s Google, long considered the most logical buyer for Twitter as Google is the firm to be bet on which evolves with ideas and innovations, and Walt Disney would not bid for the social network, leaving cloud software company Salesforce as the only known suitor.

Salesforce, which is not profitable, has a market cap of roughly $46 billion—Twitter would be the company’s most expensive acquisition by far as if it happens (as we’re living up on rumours till now).

In an interview with CNBC, Salesforce CEO Marc Benioff said Twitter has “severe challenges,” and he wished Twitter CEO Jack Dorsey well. “I’m not saying I’m buying it, but I’m not saying I’m not buying it,” the Salesforce CEO told the New York Times.

Twitter shares fell as much as 19.2 percent to $20.10, valuing the company at about $14.2 billion. They closed 20.1 percent lower at $19.87.

Each monthly active user of the microblogging site, Twitter is valued at just $45.10 each, which is nearly the lowest among all the major social media players. Twitter users aren’t valued anywhere near what Facebook users are despite several bidders reportedly pondering to buy the company.

The most valuable social network users are on LinkedIn. These users are valued at $243 each, much due to the $29.4 billion buyout from Microsoft announced in June. Close behind are Facebook users at $216 each.

There are several factors why Twitter’s users are so much less valuable than those using other social media platforms, including weaker monetization, lower user growth, visibility, and lack of profitability.

Twitter failed to accomplish the expectations despite having around 313 million average monthly active users and a growing presence as a source of news while much of the credit goes to their hashtags.

It has also failed to keep the place among its rivals, notably Facebook Inc’s Instagram and Snapchat. Both now boast more users than Twitter by most measures and have a firm engagement, even though they are much newer, but gained a traction of potential advertisers. Instagram stories are on a run these days and could be the next trendsetter for the brands which worries Snapchat a lot while Twitter comes nowhere in between. And Instagram’s video feature Boomerang could be the next big attraction as Facebook dedicatedly works on the user experience which is what engages the users and assures their retention.

Twitter also missed Wall Street’s sales expectations in both the first and second quarters of 2016, according to Thomson Reuters StarMine, and has yet to produce a net profit in 11 quarters as a public company.


Source: FactSet

Though reports say that Google isn’t any more interested in bidding for Twitter (or maybe it wasn’t ever) but if Google chases the Twitter, it could be the boon for the company as it has miserably failed in the social media domain, not just one but two times, Orkut which was shut down in 2014, and why someone uses the Google Plus is still in question, moreover who, and so this acquisition could be the gold pot for them.

Google would not only gain the data of more than 300 million Twitter users but it will also help to increase the relevance of results on YouTube as well as its own search engine, and eventually improving Google’s Ad pricing and revenues. Google has a chance to leverage their services from videos to data and foray themselves into the social media space, and if it happens, Facebook will too get a decent competitor because Google would be having the back of Twitter then. And that’s something huge.

“Twitter data is highly valuable because it is one of the fastest information platforms, reflecting in the moment real time audience trends and sentiment,”
said Chad Bronstein, senior vice president of partnerships at marketing technology Amobee.

“Data of this type can give marketers a first-mover edge, and enables them to connect with audiences in real time and capture their attention in a noisy advertising environment.”

We can, then, anticipate some major transformations in Twitter and of course, a better choice for the publishing platforms to promote themselves if changes occur, otherwise if we look at today’s visibility of a post, hold your timeline for 10 secs and when you scroll up a bit, you can find 100 new tweets are waiting for you to be read. Count the time, 10 secs, and I do not wish that it turns out around 1 minute, otherwise it’s too tough to look at those 500 tweets, and guess what, we aren’t the robots, even not bots. It is all that when on an average, one is following around 300 people!

If there were no hashtags on Twitter, Twitter could have become another Orkut a year before. And on the other side, if Facebook had more relevancy with their hashtags providing a better reach, the damage could have been severe and earlier. But that’s just an assumption, and today, Twitter is struggling from all the sides.

Having said that, potential buyers will need to be more creative and innovative in finding ways to give a new position to the struggling social media platform and make its presence count. Though this and that way have only dodged the Twitter so far, and most likely Dorsey knows it why.

And remember, with every brand name adds to Twitter for acquisition, their share prices see an escalation but with every name disappears, there is a quick fall, and that creates another trouble for M&A to occur.



Ayush Garg

Content Developer. Strategist. (A true) Startup Enthusiast. A kind of a guy who relies on analysis, and writes to spoil the masks. A threat to humor, if one liners could kill. Twitter: @profylayush.

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