The news that Twitter lost yet another executive this week, this time Jeff Seibart, the company’s head of product who took the job less than a year ago, has prompted one analyst to bring up the dreaded A word: acquisition.
“The changing product managers in such a short time (4 in 3 years) raises concerns that changing the product innovation cadence is more difficult than previously presumed,” Bob Peck, analyst at Suntrust Robinson Humphrey, wrote in a note on Tuesday.
He called the news “particularly disconcerting, given the progress of other platforms like Snapchat, Instagram, and Facebook.”
Twitter has long struggled with getting its user numbers up, having seen little to no growth for a couple of years now.
In the first quarter of this year, the company saw its average monthly active users grow a mere 3 percent year-to-year to 310 million, and up only 1.6 percent from 305 million the quarter before. That was actually an improvement from its Q4 report, where user growth was either flat quarter-to-quarter, or possible even down, depending on how you looked at it.
Earlier this month, Twitter was reportedly surpassed by Snapchat, a company half its age, in daily active users.
With those trending numbers, combined with the apparent difficulty in finding someone to make the product more palatable to users, has led Peck to one conclusion: that Twitter should be bought by another company.
“We note that if the current trend of meager user and engagement growth remains, we think it’s inevitable that Twitter will need to pursue M&A alternatives as has been discussed in the media for some time,” wrote Peck.
His idea for potential acquirers include Google, Facebook, Apple, and “traditional media properties.”
This is not the first time that the idea of Twitter being acquired has sprung up this year. A rumor started going around in January that Twitter was going to be purchased by News Corp.
Those rumors, as it turned out, were false, but they were enough to send Twitter’s stock up over 4 percent that day.
Google is typically the most talked about potential buyer, partially because of its ambitions, and failures, in the social sphere. Talks started again last summer, when Twitter’s stock dove under $30 for the first time ever. There was also a rumor in June that Bloomberg had made a bid, but that too turned out to be false. That one caused Twitter’s stock to jump 8.5 percent.
Jack Dorsey has made it his mission to make Twitter less intimidating for new users, including taking media and replies out of the 140-character limit, as well as getting rid of rules that Dorsey had called “confusing.” So far, none of his efforts have made much of a difference, or haven’t had time to.
It should be noted that, despite Peck’s seemingly dire pronouncement, he isn’t giving up on the company’s stock, nor does he think such a sale will happen any time soon.
“We want to underscore that we do not think the company is up for sale in the near term. However, we believe that if current trends persist, Twitter would be a top candidate in 2017,” he wrote.
Peck maintained a Buy rating on the stock, which dropped 1.77 percent to $15 a share in regular trading on Tuesday.
“We don’t comment on rumor and speculation,” a Twitter spokesperson told me when reached for comment.
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