Dive Brief:
- Twitter is in talks with suitors — including Google and Salesforce — over a possible sale of the company, sources told CNBC. None of the companies mentioned returned CNBC's requests for comment at press time.
- Twitter could receive a formal bid to acquire the company shortly, according to the report. Twitter shares are up 20% on news of the acquisition talks this morning.
- Twitter's board is mostly onboard with the prospect of a possible deal, sources told CNBC. A deal to acquire the company may not ultimately come to fruition but one source said talks are gaining steam and could end in a deal this year.
Dive Insight:
Rumors of a possible Twitter acquisition have been swirling in the press lately. Those rumors picked up steam after Microsoft acquired LinkedIn for $26 billion, with analysts suggesting the microblogging platform's 300 million users could be attractive to big players like Google that missed out on the LinkedIn deal. Acquiring Twitter would give Google a stronger foothold in the social media universe, where it's own product — Google+ — never really took off.
The growing whispers of a Twitter acquisition come as the company tries to reinvent itself in the face of stagnating user growth. While Twitter once tried to compete directly with Facebook to become the dominant social media platform, Facebook ultimately won that battle, with 1.7 billion monthly active users compared to Twitter's 313 million monthly active users. Twitter's user growth has slowed down in the last year, especially in the U.S. eMarketer recently revised its Twitter user growth forecast downward for this year, from a projection of 8% growth down to 2%. Other competitors like Facebook-owned Instagram and Snapchat have been growing faster than Twitter, with a recent Bloomberg report suggesting that Snapchat's meteoric rise is eating into Twitter's ad revenue.
After leaving the company in 2008, Jack Dorsey came back as CEO last year to lead Twitter's turnaround efforts. Twitter has been actively reinventing itself — including making a major play in live streaming video. Over the last half-year, Twitter has been aggressively inking deals with professional sports leagues, television networks and media companies to bring exclusive TV-like content onto its platform.
Twitter's live streaming ambitions position the company as a new, all-digital competitor for the traditional TV networks. The crown jewel is a $10 million deal with the NFL to live stream 10 Thursday Night Football games this year. Twitter also recently signed a deal to live stream the upcoming presidential debates, joining Facebook and Google's YouTube in competing for live digital video viewers. The company's first NFL live stream largely went off without a hitch, but only time will tell if consumers want to watch live events online instead of on linear TV.
Other efforts to innovate on Twitter's core product under Jack Dorsey's return as CEO include Twitter "Moments," its new "Stickers" feature, and expanding tweets slightly beyond the iconic 140-character limit it's so well-known for. If Dorsey's comeback as CEO is punctuated with a major sale, that would likely be seen as a very successful second stint at the company he founded back in in 2006.
While Twitter's growth has been stagnating, its existing user base tends to be passionate and few other platforms have yet to rival its real-time relevance, characteristics that make it an attractive acquisition for anyone looking to make a mark in social media.
