BlackBerry's rally hits the wall after disappointing Q1 >>> READ MORE

This Twitter Inc (TWTR) Stock Rally Is as Flimsy as the Rest!

Twitter stock gets a 5%-plus bump on an analyst note and more buyout rumors. But another letdown is imminent.

    View All  

Twitter Inc (NYSE:TWTR) became relevant to the financial media world once more on Tuesday, with TWTR stock picking up 5% on — wouldn’t you know it? — baseless M&A conjecture.

OK, OK, there’s a little bit more this time.

Twitter stock also was the beneficiary of something with some actual substance this time: operational performance. Or at least, one man’s estimates of Twitter’s operational performance. Canaccord Genuity’s Michael Graham said on Tuesday that he believes TWTR is getting up off the mat as far as user count is concerned.

Still, this and the other piece of news driving TWTR stock higher in Wednesday’s trading need to be taken with a shovelful of salt.

Guess Who’s Buying Twitter THIS Time?

I’m always reminded of European soccer’s “silly season” whenever I hear about the latest company linked with buying Twitter, and it’s no different this time. Japanese telecommunications giant Softbank Corp. (Japan) (OTCMKTS:SFTBY) is being heralded by some as Twitter’s next savior.

The impetus? A meeting between Softbank CEO Masayoshi Son and President-elect Donald Trump at Trump Tower today, after which Trump announced that Softbank will invest $50 billion in the United States. (Trump also mentioned that it would go toward “50,000 new jobs.”)

A report back in October — when Twitter stock soared on reports of being courted by Walt Disney Co (NYSE:DIS), Salesforce.com, Inc. (NYSE:CRM) and any other company you’d like to randomly name here — also had Softbank on the list of the interested.

Naturally, then, Softbank’s name is being flouted about again, as $50 billion would be more than enough to buy Twitter at a healthy premium and still have well more than $30 billion left over.

That’s fine. Just remember that most buyouts come with very little public foreshadowing. Instead, you find yourself reading about these deals after they’re suddenly announced on Sunday night or Monday morning. Disney bailed after weeks of rumors — including someone getting wind that DIS was working with an adviser on getting something done.

There is no hard news here. All guesswork. And when it comes to M&A, Twitter is the social media platform that cried “wolf” about 20 times too many.

Will More MAUs Really Push TWTR Stock?

Going back to Canaccord Genuity’s note, Graham said he expects Twitter to add 4.4 million monthly active users (MAUs) in the current quarter.

While that still only amounts to just 1.4% sequentially, that’s still better than the 4 million MAUs that Twitter added in Q3.

Next Page


Article printed from InvestorPlace Media, http://investorplace.com/2016/12/twitter-inc-twtr-stock-disappointment/.

©2017 InvestorPlace Media, LLC