Twitter sale ‘inevitable’ if company continues to struggle, analyst says
SAN FRANCISCO – Twitter CEO Jack Dorsey has been trying to get the struggling tech firm back on track this year, but apparently the clock is ticking.
If the company doesn’t attract more users and hit Wall Street’s expectations, a sale appears “inevitable” next year, one analyst wrote in a note on Tuesday.
“We want to underscore that we do not think the company is up for sale in the near term,” wrote Bob Peck, an analyst at SunTrust Robinson Humphrey. “However we believe that if current trends persist, Twitter would be a top candidate in 2017.” Google, Facebook, Apple and traditional media companies are the most likely buyers, he wrote.
Other analysts said that while a sale is possible, they don’t think it’s inevitable. “When things go bad, it doesn’t necessarily mean you sell yourself or that someone wants to buy you. Any company could be for sale under the right circumstances,” said Brian Wieser, an analyst with Pivotal Research.
A Twitter spokeswoman declined to comment about predictions regarding a potential sale, noting that the company does not comment on “rumor and speculation.”
Twitter has made changes since Dorsey, who also leads mobile payment company Square, returned as permanent CEO in October. The company rolled out a new feature called “Moments” to make it easier to follow live events and topics, inked a deal with the NFL to stream Thursday night football games and tweaked its 140-character limit. But Twitter has faced layoffs, struggled to attract new users and a string of executives have been leaving the tech firm. Meanwhile, its competitor Facebook has 1.6 billion users and has ramped up its live video efforts.
Twitter stock has also taken a beating, and in the first quarter, the company’s revenue failed to hit Wall Street’s expectations. Twitter reported sales of $595 million from January to March, below expectations of $607 million.
Peck’s note came after Recode reported on Monday night that Twitter was replacing its head of consumer product Jeff Seibert, who will go back to running Twitter’s developer product Fabric. The company is still searching for a replacement and senior engineering director Ed Ho is taking over the job temporarily.
“This year we’re focused on delivering on five product priorities – refining our core service, live-streaming video, creators, safety, and developers – as well as recruiting great talent . and have asked some of our top leaders to take on key roles in the other priority areas,” the Twitter spokeswoman told The Mercury News in a statement.
In January, Twitter’s vice president of product Kevin Weil was among the four executives the company confirmed were leaving. Weil took a job as the head of product for photo-sharing site Instagram, which Facebook owns.
“The change of a head of product is not a minor issue. They’re continually iterating to figure out how they can be more ubiquitous and they’re not there yet,” Wieser said.
There have also been reports that Twitter met with Yahoo to discuss the possibility of merging the two companies, but that idea doesn’t appear like it will come to fruition.
Twitter stock closed down 1.7 percent on Tuesday at $15.01 per share. The social media site has about 310 million monthly active users.