Sunday, October 23, 2016
Twitter: Softbank Nothing But Trader Chatter
Twitter (TWTR) surged 7% on what appears (via Barron's) was trader chatter about a rumor in a likely move to run the stock up. While it wouldn't surprise me that SoftBank would have interest in buying Twitter, the firm recently closed on a sizable $32 billion deal for ARM Holdings.
A purchase of social-media giant seems highly unlikely, especially with Twitter having no apparent motivation to sell. SoftBank is reportedly working on a $25 billion tech fund that Saudia Arabia wants to join and grow to $100 billion over five years. The news of the fund could definitely place Twitter on the radar in 2017 after the NFL deal has played out and company has proven whether or not live video is a catalyst for growth.
The NFL stats for Week 7 shows the service stagnating at around 3.1 million viewers per game. With the weak NFL games on TNF, the numbers are solid but one has to wonder whether enough people are viewing these games to grow the user base. Clearly though, an average audience of 300,000 per game is growing the engagement on the platform.
The stock likely gives up some of the gains from Friday outside any other merger rumors. See my previous articles recommending Twitter on dips and not chasing the stock on merger rumors.
Twitter: Market Missing Business Shift
Twitter: Price Matters
Twitter: Hit The Gas
Disclosure: Long TWTR. Please review the disclaimer page for more details.