Four reasons Twitter is a prime takeover target

Grace Rahman
Follow Grace
#BuyTwittershares (Source: Getty)

With (more) rumours of a takeover sending share prices up by more than 20 per cent, Twitter’s run of bad luck may about to be over.

But why would a firm known for its inability to make money be an appealing takeover prospect? Here's why the company might not be such a bad bet...

1. Its share price is down significantly

Twitter's shares are worth just $22.66 each, less than a third of their peak price of $74.73 way back in 2013, largely because it has failed to meet analysts' (admittedly high) expectations since its IPO in November 2013.

Second quarter results, published in July, were a case in point: although revenues were at $602m, up 20 per cent on the year before, they were still below analysts' expectations of $606m. And third-quarter profit guidance was lowered, with a top end of $610m - way below the $678m analysts were expecting.

2. Its algorithms are getting smarter

Only yesterday, Twitter discreetly introduced a new feature to enhance its algorithm: in an attempt to have more of an editorial influence over its users’ timelines, the firm has given iOS users the option to click "I don’t like this tweet", and in doing so learn more about their interests. That will pique the interest of anyone looking to do more targeted advertising.

3. The platform is adapting

The much-maligned decision to extend tweets beyond the 140 character limit outraged the Twitter community back in January. Tweets were going to reach 10,000 characters and the firm’s fan base was not happy.

The changes to tweet length introduced just a few days ago were actually far more sensible - media attachments are no longer counted against the word limit. The company heeded popular opinion and won out.

4. It’s taking copyright demands seriously

This summer, Twitter did the seemingly impossible - it policed the creation of gifs of the Olympic games. Gifs, the short animated graphics with no sound, are a popular way to tell stories on the social network - but an Olympic gif could get a user banned with such speed that some complained the best way to get your troll to stop threatening to kill you was to make them tweet a gif of the games.

This behaviour, although seemingly extreme, could protect the company’s slim profits from the onslaught of a copyright lawsuit.

Related articles