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Twitter, Inc. Stock Jumps on Buyout Rumors

By Daniel Sparks – Sep 23, 2016 at 1:45PM

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Twitter investors are optimistic about the idea of a buyout. But there's no official word of one yet.

What happened

Shares of Twitter (TWTR) soared as much as 22.9% on Friday morning following rumors that the social network is courting a few buyout offers. Shares are up 17% at around 12:50 p.m. EDT.

Twitter headquarters. Image source: Twitter.

So what

Twitter "has received expressions of interest from several technology or media companies and may receive a formal bid shortly," reported CNBC on Friday morning. 

Interestingly, CNBC specifically named two tech companies as "potential suitors": Alphabet (GOOG -0.44%) (GOOGL -0.55%) and (CRM -1.66%). But these are just two names "among other technology companies," according to CNBC.

CNBC cites unnamed "sources" for its scoop.

Salesforce is trading about 5% lower on the news, suggesting investors might disagree with the logic of a Twitter acquisition. Alphabet shares are trading flat.

Now what

Twitter investors are likely bullish about a potential acquisition because they believe shares would sell at a premium in a buyout transaction, particularly given that shares are down compared to a year ago. Twitter stock is down about 18% in the past year, even after recovering 36% in the past three months.

Investors should keep in mind that this is only speculation. And even if an acquisition does occur, it's impossible to guess what price the buying company would pay for Twitter.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Daniel Sparks has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Twitter. The Motley Fool recommends 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.

Stocks Mentioned

Twitter Stock Quote
Alphabet Stock Quote
$100.44 (-0.55%) $0.55
Salesforce Stock Quote
$144.56 (-1.66%) $-2.44
Alphabet Stock Quote
$100.83 (-0.44%) $0.45

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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