TCA Financial: Stock in struggling micro-blogging company, Twitter soared over 20% at the end of last week after it became the subject of takeover talks. Market speculation suggested that the San Francisco-based technology firm was being sized up by several potential suitors including Salesforce.com and internet search giant, Google.
Twitter has grappled with an apparent inability to consistently add monthly active users (MAUs) at a rate that pleases Wall Street as evidenced by consecutive quarterly earnings reports. It has also regularly disappointed investors by issuing lackluster guidance on future revenues. The company’s stock has had a difficult 12 months plunging to levels well below its IPO listing price of $26 despite bringing back current CEO and co-founder, Jack Dorsey in an effort to revive its fortunes.
“Despite widespread negative sentiment towards Twitter, the company is ripe for takeover if only because of the 300 million hardcore, loyal users who still use the platform religiously,” said Tom Lee who leads technology research at Hong Kong-based broker, TCA Financial.
He likens the potential of a deal to that between Microsoft and LinkedIn, the largest professional social network which was inked earlier this year though he warns that lofty numbers around the $30 billion mark were “highly optimistic given the company has never made a profit despite a decade of operations”.
TCA Financial lowered its rating on Twitter stock earlier this year but, at the time, suggested the company could look appealing to a larger suitor better able to monetize its solid user base.

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