Struggling social network Twitter, which has been battered by Wall Street due to sluggish growth and performance, is exploring a sale with both Google and Salesforce among its suitors. The San Francisco-based platform, according to the Financial Times, has enlisted Goldman Sachs and Allen & Co. to assist in the sale of the company, which is valued at $16bn.
According to the report, Goldman reached out to several global media companies about purchasing the network, with tepid response. Recently, Twitter changed its classification as a news app -- not a social networking app -- and it could be interesting for large news organizations to consider.
Twitter, with north of 300m users, has been on the ropes as growth has been sluggish, with eMarketer indicating that its worldwide share of 12 per cent remains pretty much unchanged, despite attracting new users. Additionally, the social network has been in flux as the product continues to morph away from its original offering of a chronological timeline for users. In an attempt to shore itself up, Twitter has inked several streaming deals in sports and entertainment to better reinforce its “live” position, added new TV-centric apps, and it relaxed its unique 140-character limit — moves that, along with the reappointment of co-founder Jack Dorsey to CEO, have been designed to breathe life into the network.
As noted, investors and analysts are not terribly high on the company, with the stock trading yesterday at $18.22 a share. It has since rallied to $26 a share, the same price as when it went public in late 2013, after news of the sale broke today. Twitter had reached a peak of $69 a share in January 2014, a few months after its IPO. Its value lags far behind social giant Facebook and social app darling Snapchat, that is valued higher in the private market.
Advertising revenue is another thorn in Twitter’s side as Bloomberg reported that RBC conducted a survey that painted a bleak picture — with 30 per cent of respondents saying they didn’t spend any money on the platform and 3 per cent saying that their return on investment has improved. This prompted RBC Capital Markets Analyst Mark Mahaney to write, “When ranked against its peers, Twitter ranked fifth of seven in terms of ROI to advertisers, behind Google, Facebook, YouTube and LinkedIn, but ahead of Yahoo and AOL.”
Mahaney also downgraded shares of the site to “underferform” and lowered its price target from $17 to $14.
Neither Salesforce or Google have officially commented on the speculation. However, according to the Financial Times, Vala Afshar, Salesforce’s chief digital evangelist, in a personal tweet pondered: “Why Twitter? 1 personal learning network 2 the best realtime, context rich news 3 democratise intelligence 4 great place to promote other.”
Salesforce, for its part, is keen to own a social network as a sales development tool and isn’t afraid to spend, having aggressively bid for LinkedIn, which was ultimately sold to Microsoft for $26.2bn in June.