Twitter (Twitter, Inc. 19,97 -0,03 -0,15%) is fast approaching takeover territory. The stock price ended at $20.26 per share, dropping 5.28% yesterday alone, down from the 52 week high of $53.49. After months of decline, today may see Twitter reaching takeover territory. The $19 price point is one many experts have been looking at.
This has all been caused because Twitter has not been able to attract sufficient numbers of new users, and the failure to grow a user base potentially impacting future revenue. Twitter’s earnings are linked to acquiring new active users, and keeping existing users engaged, because a limited number of users means a limited income.
Experts have also speculated for a while that companies such as Google (Google Inc. 950,70 -29,64 -3,02%) Facebook (Facebook, Inc. 165,28 -0,72 -0,43%), or even Yahoo! (AABA 58,07 -0,08 -0,14%) could attempt a hostile takeover if the stock price fell sufficiently. The takeover price that seems to have some consensus is the $19 per share range, which we could see today. However, don’t expect it to stop there. I projected the stock to hit a $17 low.
Twitter Did This to Themselves
Twitter has made many changes, both to the platform and personnel, in order to fix the problem. There are two issues driving Twitter’s inability to attract user. First is that stockholders are demanding change, but are not social media experts. So, many of them are looking at the most successful social media platform (Facebook) and demanding, “Be like them.”
So, Dick Costolo, the former CEO of Twitter. and Jack Dorsey the replacement CEO, both have attempted to make Twitter more like Facebook. The problem with that is the same challenge faced by GooglePlus, the world does not need a weak-tea version of Facebook. However, after Costolo left the company, Dorsey doubled down on the idea.
Twitter has added a “While You Were Gone” feature to their newsfeed, replaced the “Fav” button with a “Like.” and created “Moments.” While doing all of this, they have continued their long practice of increasing restrictions on developers, the very developers who helped grow the service. At the end of November, the most visible restriction seen by users, was Twitter stopping counts of link shares, an essential tool used for Social Proof.
Twitter Doubles Down on Weak -Tea
This week, Twitter has allowed it to become public they are exploring expanding tweet limits from 140 characters to 10,000 characters. The response from the Twitterverse seemed to be generally negative, with demands the platform make changes users really want, like the ability to edit tweets.
The expansion of tweets to 10,000 characters takes Twitter one step closer to the vision of management and many shareholders, to become more like Facebook. Unfortunately, it takes the platform another step away from its user base. Instead of attempting to make Twitter the best version of itself, they are making it a bad version of Facebook. Who needs that?
It appears that a Twitter takeover will be my first successful prediction of 2016. Google (aka Alphabet Inc.) remains the most likely. However, there are a list of possibilities. Expect movement soon.