Could Warren Buffett Buy Twitter Inc?

People always want to know what Warren Buffett will buy next with Berkshire Hathaway. And it turns out Twitter may be just the one.

May 11, 2014 at 12:12PM


Tweet tweet, Warren. Source: HomeServices America. 

Warren Buffett loves buying companies on the cheap. After tumbling nearly 50% so far in 2014, Twitter (NYSE:TWTR) is a whole lot cheaper. Could Buffett be a buyer?

The difficult five months
2014 has been rough for Twitter. Wall Street was disappointed with its user growth. Its employees can begin selling their shares. And the lofty valuation has caused many to unload the popular social media site. Fear is in the air.

Warren Buffett of Berkshire Hathaway once famously remarked:

Be fearful when others are greedy, and be greedy when others are fearful. 

And he has made no secret that he's looking to make a major acquisition. The natural question then becomes, would Warren Buffett acquire Twitter?

The big elephant
Buffett has reiterated his desire to make major acquisitions, and in 2010, he noted in order for Berkshire Hathaway to continue to deliver returns:

We will need both good performance from our current businesses and more major acquisitions. We're prepared. Our elephant gun has been reloaded, and my trigger finger is itchy. 

In 2012, CNBC and New York Times journalist Andrew Ross Sorkin noted:

Of course there was the major acquisition of Heinz in 2013, but Buffett added in this year's letter he continues to search for elephants.

Buffett aims to keep around $20 billion of Berkshire's cash on hand. But he has nearly $50 billion of cash sitting around, meaning there is more than enough for Buffett to be comfortable making a major buy.

With Twitter having a market value of $18 billion, a 50% premium would still leave Buffett with plenty of cash.


The considerations
So Buffett is looking to make a big splash, Twitter falls in his price range, and he's always a fan of the market overreacting. Does Twitter have everything the Oracle of Omaha is looking for?

In 2012, Buffett bought 28 newspapers (yes, physical papers) for nearly $350 million. Although they were small purchases in his book, he added he loved newspapers and he would buy anything "if their economics make sense." 

Although he openly admitted "advertising and profits of the newspaper industry overall are certain to decline," he went on to say:

News, to put it simply, is what people don't know that they want to know. And people will seek their news– what's important to them – from whatever sources provide the best combination of immediacy, ease of access, reliability, comprehensiveness and low cost.

Think about that for a second.

Buffett was drawn to newspapers first if their economics made sense, but secondly because they provide "immediacy, ease of access, reliability, comprehensiveness and low cost" of what people want to see.

Put simply: On an exponentially greater scale, Twitter offers all six of those identical characteristics.

People can follow who and what is important to them -- whether they be papers, celebrities, friends or anything else -- see tweets instantly, consistently, and easily on their phones or computers, and easily follow links for more detailed information.

And the only thing better to customers than low cost is no cost.

With that in mind, it's not crazy to think Twitter's business model may pique the interests of Buffett.

The four key characteristics
Taking it a step further, Buffett once said when considering buying a business:  

Charlie and I look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag.

In fact, it can be argued Twitter meets all four of those characteristics too. It's simple. It's ad revenue nearly doubled -- from $0.74 to $1.44 per 1,000 views -- over the last year. It has a remarkably successful management team. With the plummeting price, Buffett may suggest its current value is "sensible."

Warren Buffett Insider Monkey


Yet the real hang-up on Buffett's potential Twitter decision comes when he later added he would "rule out companies in industries prone to rapid and continuous change," and "the worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines."

The rapid change in the social media landscape and the significant investments needed at Twitter (it reported a loss of $132 million in the first quarter) highlight its negative characteristics.

Twitter meets some of the key qualifications for a Berkshire Hathaway purchase, but it falls short in others.

The final thought
After the tech bubble burst in 2001 Buffett said: 

At Berkshire, we make no attempt to pick the few winners that will emerge from an ocean of unproven enterprises. We're not smart enough to do that, and we know it.

In 2009, he added: 

Charlie and I avoid businesses whose futures we can't evaluate, no matter how exciting their products may be.

It's easy to dream of Buffett buying Twitter, but the likely reality is, he never will. Although it has certain qualities Buffett loves to see, it has too many which turn him away.

While that's not to say neither you nor I should mark Twitter off our lists, we will not see Twitter #BoughtByBuffett anytime soon.

Warren Buffett just bought nearly 9 million shares of this company
While Warren Buffett may not buy Twitter, he is buying up massive amounts of one firm. Imagine a company that rents a very specific and valuable piece of machinery for $41,000... per hour (that's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report details this company that already has over 50% market share. Just click HERE to discover more about this industry-leading stock... and join Buffett in his quest for a veritable landslide of profits!

Patrick Morris owns shares of Berkshire Hathaway and Twitter. The Motley Fool recommends Berkshire Hathaway and Twitter. The Motley Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers