Twitter shares surge amid reports it is inching closer to sale

The Twitter logo displayed on a banner outside the New York Stock Exchange (NYSE) on Nov 6, 2013.
The Twitter logo displayed on a banner outside the New York Stock Exchange (NYSE) on Nov 6, 2013.PHOTO: AFP

NEW YORK • Twitter is moving closer to a sale, CNBC reported yesterday, sending the social media company's shares soaring by the most in more than two years.

The beleaguered firm is engaged in conversations with potential suitors that are said to include and Alphabet unit Google, among others, CNBC said quoting unnamed sources. Twitter may get a formal offer shortly, it added.

Speculation that Twitter is ripe for a sale has been swirling for months as the microblogging site has failed to draw new users, leading to several quarters of stagnant growth and a plummeting stock.

The shares were down almost 20 per cent this year before yesterday's surge, Bloomberg reported. They were trading up 18 per cent at US$21.99 at 9.38am in New York, well below the November 2013 IPO price of US$26 a share.

Microsoft's US$26.2 billion (S$35.6 billion) purchase of LinkedIn in June sparked new conjecture on likely candidates for Twitter.

Salesforce, which lost out to Microsoft in the bid for LinkedIn, has remained among those seen as candidates, as has Google.

Mr Vala Afshar, whose LinkedIn profile says he is the chief digital evangelist at Salesforce, put out a tweet after the CNBC report that hinted at the company's interest.

"Why @Twitter? 1 Personal learning network; 2 the best realtime, context rich news; 3 democratize intelligence; 4 great place to promote others," the tweet said.

Twitter has struggled to find a way to boost user growth and win over advertisers in recent years, as social media services such as Instagram and Snapchat have expanded their footprint. This, despite Twitter co-founder Jack Dorsey returning to the firm as chief executive a year ago with a long-term strategy to turn the business around.

Reports in July said that the company's second-quarter revenue missed Wall Street estimates, and its revenue forecast for the third quarter of US$590 million to US$610 million was well below the average analyst estimate of US$678.18 million.

Early this month, reports swirled that Twitter's board was weighing ways to cut costs, ramp up revenue or possibly maximise shareholder value by selling itself, Agence France-Presse reported.

Twitter's board of directors is said to be largely desirous of a deal, CNBC said, quoting people close to the situation. There is no assurance a deal will materialise, but talks are picking up momentum and could result in a deal before the year end, it added.

A version of this article appeared in the print edition of The Straits Times on September 24, 2016, with the headline 'Twitter shares surge amid reports it is inching closer to sale'. Print Edition | Subscribe