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Is the End in Sight for TWTR Stock?

Latest Google hire fuels more acquisition speculation

twtr - Is the End in Sight for TWTR Stock?

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Twitter (TWTR) stock’s “recovery” just grew to around 9% gains in the last month alone. The latest news — which comes on the heels of Jack Dorsey’s official CEO appointment and his subsequent unveiling of new TWTR features like SnapChat “Live Stories” rip-off “Moments” — was that Omid Kordestani will be the company’s new executive chairman.

twtr-stockThe announcement sent shares of TWTR stock around 1% higher yesterday, against the tide of the broader market. (Stocks across the board finished lower thanks to weak retail sales and inflation data.)

Kordestani comes from Google (GOOG, GOOGL) … from the days before it was Alphabet. He stepped down at the company’s business chief when the reorg was first announced. He stayed on as an adviser for a bit, according to The Wall Street Journal, but is no longer affiliated in any way with the company, according to Twitter spokespeople.

Focusing on the fact that Kordestani hasn’t tweeted much are arguably missed the point of the hire — or perhaps actually illuminates it. Kordestani is tasked with “providing leadership and support for the executive team, as well as recruiting key talent.”

That’s important in and of itself, considering people are the backbone of any company and considering they’re especially tough to rally after the kind of beating Twitter has suffered … culminating with layoffs for 8% of the company’s workforce.

TWTR Stock Still Stuck in a Rut

The executive’s time and experience with Google could be especially important considering speculation that Dorsey is trying to groom TWTR to be a takeover target … and that Google is one suitor at the top of that speculative list.

The Wall Street Journal noted:

“Mr. Kordestani’s appointment furthers Google’s ties with Twitter. The two companies struck a deal earlier this year to show tweets in Google search results and another partnership soon after that lets advertisers using Google’s DoubleClick ad-bidding service buy and track Twitter ads. More recently, Twitter was a launch partner for a Google service that loads news articles faster on mobile devices.”

Plus, such speculation comes amid massive consolidation in the tech world (although to mixed results). Just this week, Dell and EMC inked a merger that was the largest tech deal ever.

For perspective, Twitter’s market cap is less than half of EMC’s. Despite the prominence of the social media service, it’s a manageable buy for many of the tech behemoths out there. Alphabet’s market cap, for instance, is $460 billion while Facebook (FB) is another prospective new parent and has a market cap of $270 billion — more than 10 times Twitter’s.

Despite all this relatively positive speculation and the recent “recovery,” it is important to remember that TWTR stock has still lost 40% over the past 12 months. That loss has shaved the company’s forward P/E to less than 50 … which is actually reasonable if you consider the long-term 65% EPS growth analysts are expecting.

But taking the latest hire into consideration, it’s increasingly likely that Twitter stock may not be a thing in five years. Beyond the reality that Twitter still has more than enough hurdles in its path before things are truly back on track, there’s a good chance the social media service will simply get swallowed whole — woes and all.

Alyssa Oursler is based in San Francisco and writes about technology, investing, gender and entrepreneurship. Her work has appeared on Forbes, Business Insider, MSN Money and more. You can follow her on Twitter here or check out her personal site here. As of this writing, she did not hold a position in any of the aforementioned securities.

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