Potential Sale of Twitter: Decoding the Rumours and Implications

Less than a month ago, whispers of the possible acquisition of Twitter by tech giants like Google sent ripples across the world of technology news. These speculations springboarded from a meeting of Twitter’s board to address a slew of issues pertaining to the leading microblogging site. However, the trail seemingly went cold and was subsequently deemed to be baseless rumour-mongering.

Then, just hours ago, CNBC broke the story that Twitter might indeed be inching towards a much-anticipated sale. The list of prospective acquirers includes market heavyweights like Google, Salesforce, and Rupert Murdoch’s News Corp. This news has reportedly sparked jubilation amongst investors, with Twitter’s share prices skyrocketing on Friday.

The consensus around Twitter’s board of directors leans favorably towards a deal, as per sources close to the situation. Although the sale is not imminent and there is no guarantee that a deal will ever see the light of day, inside sources hint at the discussions gathering pace and possibly culminating in an agreement by year-end.

Twitter, which was valued at a staggering $40 billion in 2013, is now believed to be worth about half of that figure. Some market pundits even argue that it is worth significantly less than $20 billion. But the potential sale, set to potentially materialize at the end of this year, is still subject to market fluctuations that could dramatically swing share prices in either direction.

Interestingly, while some stakeholders anticipate larger revenues if the company is acquired by a prominent player, others believe that selling Twitter may be necessary to rejuvenate the brand. A comparable scenario is the fall from grace of Yahoo, which once boasted a valuation of $128 billion but was sold for a mere $4.8 billion following revelations of half a billion user accounts being compromised in a 2014 hack.

In a bid to reverse its fortunes, Twitter has rolled out a range of initiatives, from focusing on video content, including providing universal access to live streaming via Periscope, to relaxing its distinguishing 140-character rule for Direct Messages. Despite these efforts, the company’s financial outlook has not significantly improved. Furthermore, Twitter’s user growth has stagnated, echoing Yahoo’s experience of declining user engagement as more people flocked to alternative platforms like Facebook.

While appointing new executive leadership is often seen as a bid to revive an ailing company, these efforts have proved fruitless for both Yahoo and Twitter. Yahoo’s appointment of Marissa Mayer in 2012 failed to reverse its dwindling earnings. Likewise, the return of Jack Dorsey after previous CEO Dick Costolo stepped down in 2015 has done little to alter Twitter’s declining trajectory.

Ultimately, Twitter may follow Yahoo’s footsteps and submit to a larger entity. If so, it will mark not only a significant shift for the company, but potentially for the broader landscape of social media activity and competition.

Perhaps the old adage is true – where there’s smoke, there certainly appears to be fire.