Tech Stock Favourites: Twitter Inc.
Twitter shares have seen a huge rise in volatility in recent weeks on the back of takeover rumours. The stock was almost a completely lost cause earlier this year. But corporate activity seems to have put a spin on things – the market is constantly evaluating what the value of Twitter is to a potential suitor and if so, when a deal will occur.
Our view is a Twitter takeover isn’t imminent – if it was, the stock would have continued rallying when the news first broke a couple of weeks ago. But by the same token, there could be a potential down within the next few months. Twitter has become somewhat redundant as a cutting edge social platform, but it still has scale and a large user base. The value of the business is probably greater with someone else – but who and by how much?
At US$15bn market cap as of the time of writing, there is still scope for upside. You would think the downside is capped at around the US$16-20 price range where the stock was trading before the takeover rumours. Microsoft is probably the most likely suitor for Twitter given its under exposure to social media and its recent push into the B2B social space through the acquisition of LinkedIn. We view Google as the least likely – its past acquisitions have been quick and at the early stage of business growth, not at the maturity stage as Twitter finds itself.
Expect more volatility in the next few months.
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Chief Market Analyst
Peter Esho is a member of Invast’s Investment Committee and Chief Market Analyst at Invast Financial Services in Australia. The Invast’s Investment Committee constructs professionally constructed global thematic portfolios of Direct Market Access (DMA) CFDs over highly liquid global shares and ETFs through its new PortfolioInvestor platform. Since 1960, the Invast Group has grown to become one of the largest and most successful global brokerage firms, offering state-of-the-art trading technology and unparalleled service catering to all levels of traders.
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