Salesforce.com, Inc. (NYSE:CRM) jumped 6% on Monday amid reports that made a buyout of Twitter Inc (NYSE:TWTR). This morning, CRM stock is off 2% now that it seems like CEO Marc Benioff is committed to the cause.
That has been the way for Salesforce shareholders for the past few weeks. Any optimism about a TWTR deal is met with selling; any pessimism triggers buyers in CRM.
Right now, with potential deep-pocketed bidders Alphabet Inc (NASDAQ:GOOG) and Walt Disney Co (NYSE:DIS) out of the way, Salesforce is now looked upon as the ideal candidate. And Salesforce — assuming it wants Twitter — seemingly has no credible threat with which to compete for the media giant when it comes to price.
Though he hasn’t said outright that he’s ready to buy Twitter, Salesforce CEO Marc Benioff has not shied away from the topic.
CRM stock has responded accordingly.
“When it comes to Twitter you have to look it like this,” Benioff on CNBC at the Dreamforce conference this week. “We look at everything, you name it we had a look at it. It’s in our interest to look at everything. We have to go deep on everything. We have to understand what is possible for our shareholders and what isn’t.”
A few days later, sources say Twitter and Salesforce still are engaged in discussions.
Why Salesforce Should Buy Twitter
Salesforce, which has already spent $4 billion on 10 acquisitions in 2016, should be aggressive in its pursuit of TWTR, given the value Twitter’s data can bring to Salesforce’s service.
While Salesforce has come under scrutiny for investing in growth rather than focusing on profits, management has nonetheless placed the right bets by anticipating the importance of customer relationship management. It’s for this reason CRM stock still has a consensus buy rating and is projected to rise 30% in 12 months.
Picking off Twitter, which has a huge customer-service platform, will widen the gap between Salesforce and the likes of International Business Machines Corp. (NYSE:IBM), Oracle Corporation (NYSE:ORCL) and SAP SE (NYSE:SAP), especially in the realm of digital cloud marketing. With Salesforce’s expertise in the cloud to manage various business functions like sales, marketing and big data analytics, Twitter’s ability to allow users to engage with businesses and allow its users to speak directly to corporations will solidify Salesforce’s customer relationship management solution.
And do you think Benioff is unaware of this?
“One of the most exciting things that’s going on right now is that we’re moving into a world where everything is one-on-one and the ability for a company like General Motors Company (NYSE:GM) to speak directly to that consumer is more important now than ever,” Benioff said. “The ability to bring that information down – the intelligence of that one-on-one relationship – all the way down to the consumer, with the intelligence built in, that is an incredible opportunity.”
If that is not a subtle expression of excitement from Benioff about Twitter, it’s pretty close.
Bottom Line on CRM Stock
With Salesforce’s customers already using Twitter as a customer-service platform to interact in real-time with their own customers, the integration with Twitter could be seamless.
CRM stock might endure some short-term pain, but it’s a solid vision — one that should work out if you’re patient enough to wait out the waves.
Benioff, who is good friends with Twitter CEO Jack Dorsey, would only need to make a phone call and get the ball the rolling.
As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.
