Twitter Inc. (TWTR) continues to build on yesterday’s upward momentum. The name gapped up at the open Tuesday and has risen sharply in early trade on above average volume. TWTR is now up nearly 5% at $15.23 after surging to an intraday high of $15.42. TWTR shares closed Monday at $14.55, up big on increased takeover speculation following the acquisition of LinkedIn (LNKD) by Microsoft (MSFT).
While the $26 billion acquisition of the online professional network operator announced yesterday is seen as good news for Twitter, MKM Partners this morning assessed Microsoft’s $196 per share purchase – the largest-ever M&A deal for an Internet company – arguing against the notion that M’soft’s bid has positive implications for Twitter or other social media platforms. The firm thinks this is clearly an effort for the software giant to bolster its offerings to empower knowledge workers and not an acquisition intended to boost its consumer Internet offerings.
Shares of Twitter, Inc. hit a new 52-week low of $13.73 set on May 24, 2016. It is quite likely that we will see the new low re-tested in the coming weeks, which would further deteriorate the company’s market position. Twitter has a market cap of $10.5 billion, and a stock trading at 22x forward its price/earnings ratio.
TWTR currently prints a one-year loss of about 60%, and year-to-date loss of around 37%. Rival Facebook Inc. (FB) has gained approximately 40% and 9%, respectively, over the same time period.