Shares of Twitter, Inc. (NYSE:TWTR), which were slightly higher in pre-market trade, plunged more than 13% in early trading on Monday, their lowest levels in more than two months, following a report over the weekend from Bloomberg News stating that top potential bidders, including Salesforce.com, Inc. (NYSE:CRM) and Walt Disney Co. (NYSE:DIS) had lost interest in the micro-blogging network partly due to its negative image.
In Salesforce’s case, whose stock it’s worth noting has been on a wild ride thus far in October on ongoing rumors of a deal with Twitter, CEO Marc Benioff decided not to pursue an acquisition bid over concerns about the social platform’s hands-off approach to abuse and harassment on its service.
“What’s happened is, a lot of the bidders are looking at people with lots of followers and seeing the hatred,” CNBC’s Jim Cramer said during Monday’s “Squawk on the Street”segment, citing a recent conversation with Benioff. “I know that the haters reduce the value of the company…I know that Salesforce was very concerned about this notion.”
Cramer didn’t further elaborate on Benioff’s thinking, but said he had spoken with his shareholder base and they had told him about the dislike by some for the platform.
Last week, Benioff confirmed to The Fiancial Times his company was backing away from a Twitter deal because as he put it: “it wasn’t the right fit for us.”
Disney also decided against a Twitter bid on concerns that bullying, issues involving user harassment and other abusive behavior on the social media site might negatively affect the company’s wholesome family image.
Other reasons for the lost interest in making a bid for the San Francisco-based company include Twitter’s struggling to build on the growth momentum of its early years, engagement trends that keep diminishing and its $11.8 billion market cap.
Twitter’s troll problem isn’t anything new. A study last year of 134,000 abusive social media mentions showed that nearly 90 percent of them occur on Twitter.
It it remains to be seen the market’s reaction in terms of fair value for Twitter’s stock now that the buyout speculation is off the table.
TWTR Stock Action
Twitter’s stock gained 0.12% to $16.92 on Friday. After peaking at $24.87 on October 5, shares have nosedived 32% as potential acquirers including Apple (NASDAQ:AAPL) and Google-parent Alphabet, Inc. (NASDAQ:GOOGL) withdrew their interest.
Shares of the social media giant plunged nearly 15% last week. And it doesn’t stop there, as last week’s drop follows a nearly 14% drop the week before.
Twitter is down 46% year-over year and 27% since January 1. The name, which hit an all-time low of $13.73 in early May, is nearly 36% below its IPO price and more than 77% lower than the peak of $74.73 it hit way back in Dec. 2013.
Of the 37 analysts following the equity, seven rate TWTR shares a ‘Buy’, 23 recommend ‘Hold’, whereas the rest suggest a ‘Sell’ rating. The 12-month consensus price target is $16.
Twitter Whisper Number
Twitter is slated to report results for its third quarter on Thursday, Oct. 27, after market close. The Street is looking for EPS of $0.09 and revenue of $606.4 million. Last quarter, the company posted a significant positive earnings surprise of 30%, reporting EPS of $0.13, $0.03 better than the Street’s consensus estimate of $0.10. Revenues increased 10.46% year-over-year to $602 million versus the $545 million reported.
Beyond Twitter’s expected revenue and EPS, EarningsWhisper.com reports a whisper number of $0.12 per share.
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