Twitter Shares Slump After Report Says Google Won’t Make a Bid | Hacker News Reader

Twitter Shares Slump After Report Says Google Won’t Make a Bid

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256 pointsJumpCrisscross251 comments

I don't see this deal happening. The board are going to want a premium on a price that is already inflated because of the speculation and I can't see Disney going to $25-30B nor Salesforce being able to construct a deal around stock

Salesforce: in exchange for ~50% of market cap would be adding $2B of Twitter revenue growing at ~5% to their $6B of revenue growing at 25%+

Disney: for 16% of their market cap Twitter's revenue is half of what Disney's top-line has been growing each year - and again not much growth

Can't see a case where either would unlock user or revenue growth

Not sure what is next for Twitter, but it looks like another year of plodding along trying different things.

I can imagine this turning out the way the Yahoo! thing went down last time. They wanted too much everyone bowed out (MS as well) and now where are they? Firesale which may or may not go through.

With Goog and maybe Disney bowing out maybe other parties are waiting for a firesale to pick them up.

Are you referring to Microsoft's 2008 offer to acquire Yahoo? That offer amounted to $31 a share, YHOO today is trading at $43-44 a share.

>YHOO today is trading at $43-44 a share

What % of that is their core business that MS offered to buy?

Yes, for how much now, ~5B. And what are its prospects? It's only been downhill for Y! since then. Marissa did a decent job trying to salvage it after nearly half a dozen CEOs prior to her vacillated, but it just never got its bearing and I fear similar is the case for Twttr.

You have to be careful quoting offer prices. Microsoft's 2008 offer for YHOO today would be ~$46.80/share.

It is best to look at market cap to determine value - Microsoft's 2008 offer was $44.6B; Yahoo's current market cap is $41.65B.

The discrepancy from then to now comes from the number of shares outstanding. There are fewer outstanding YHOO shares today than there were in 2008.

Did you also adjust for inflation in there? If not, there's an additional ~10% that can be adjusted for. $44.6B in 2008 would be $49.84B in 2016 USD, an even wider gap.

But there are fewer shares because yahoo "returned" north of $10B to investors through share buybacks. Not exactly sure how that should be accounted for, but I think relevant to the calculation.

Indeed, for a long-term "buy & hold" investor, the share price is much more meaningful than market cap because of the buybacks.

Did that offer include the AliBaba stake?

The difference is that Yahoo actually made real money and had valuable assets other than its core offerings (Alibaba).

Twitter is just an overgrown, overfunded startup without an obvious path to revenue strong enough to support its operations and growth.

Twitter makes ~$2 billion in revenue. Their market cap and funding may not fit, but they're a pretty huge company.

Huge waste of money is more like it. Call me an old-fashioned businessman, but $2 billion in rev still sucks when the end result is a $500MM loss. Even at that scale, $500MM is no small gap to close, especially when your primary competitors are wildly superior and better platforms for your core business are emerging all of the time (snapchat, for instance).

Scaling up a weak business to epic heights doesn't magically make it a success for shareholders. Initial investors, sure.

I should add that when I said "overgrown startup," the implication wasn't that it's a small company. I'm saying that they've operated at a loss for all of their existence (like many SV startups) and never turned that around. Scaling while failing, and they hoped that another round of investment (IPO) would give them time to change that.

Two billion in revenue is a lot less impressive when you consider that they spent half a billion more than that in the process.

Generally, people like their businesses to reliably turn $1 into $2 over time, not turn $2.50 into $2 over and over.

Particularly if what you do with the other $0.50 is build something that's only valuable because of the group behavior of a few billion fickle users who will almost certainly desert you at some point in the future for something newer and shinier.

But nice work if you can get it in the meantime.

    Generally, people like their businesses to reliably turn $1 into $2 over time, not turn $2.50 into $2 over and over.

I genuinely laughed out loud that you qualified that with "generally." Some quality dry sarcasm if I've ever heard it.

> a few billion fickle users

If Twitter actually had a few billion users it would be pretty valuable. IIRC it has just a few hundred million.

Maybe the tax losses would be worth something, but I don't consider it likely someone to pay $15.2bn for Twitter. Heck, even $5bn is still a lot of money to pay for a business that's losing $500mm a year.

Could you fire two thirds of all the staff and make it profitable?

I don't care much about this whole ordeal but your numbers are plain wrong.

FYI Twitter's revenue has basically doubled every year the last 5 years.

And how has profit followed along?

The poster said Twitter's revenue has grown 5%.

This is wrong. No matter how much you down vote me, no matter how much you want that to be right, that number is wrong. Look it up yourself.

Twitter revenue is growing at 20% y/y as of last quarter, not 5%.

This leaves them being worth ~$10 billion (revenue * (0.1 * growth + 1)) (or ~$18 billion if the 6.4x multiple LinkedIn got is used). It'll be mighty hilarious to see potential bidders grossly overpay for a company that's already steadily slowing/declining.

How exactly is $2B * (0.1 * 5% + 1) == $10B? I genuinely want to understand your valuation formula.

https://news.ycombinator.com/item?id=12651012

According to the poster, the growth rate is 20% not 5%. Either way, to ball park acquisition price, you can divide growth rate by 10, add 1, then multiply in yearly revenue ((growth% / 10 + 1) * revenue). You can also divide growth rate by 10, double it, then multiply in yearly revenue ((growth% / 10 * 2) * revenue). Those estimates assume profit margins of 30%, so if you want to have it all be a multiple of profit, then divide the multiple by 0.3, then multiply that into yearly profit ((growth% / 10 + 1) / .3 * profit --or-- growth% / 10 * 2 / .3 * profit).

I don't intuitively understand where that 0.1 comes from but otherwise it looks a lot like a formula for compounded growth of 5% a year that is missing an exponential term.

Was 20% - referring to future growth, based on guidance for upcoming quarter it is ~5%

This is, afterall, the problem that sparked all the acquisition talks

Underlying driver here is that users are migrating en masse to Facebook now for their professional updates and post streams. Twitter is most impacted, but LinkedIn too. That's why TWTR selling, LNKD sold. The market for users attention, not just the market for their stocks is moving against them. FB is like the wandering Jupiter of our early solar system- the 'grand tack' is sweeping up the smaller bodies in the solar system. Good to be Jupiter..

Do you have a source for this?

I just use (or avoid using) facebook for totally different reasons than I use twitter.

On twitter I mostly communicate with people I've never met and have little association with apart from shared interests. It's a great way of meeting new people.

Facebook is for communicating with people I already know, many of who are actively searching for alternatives but because "everybody uses it" are locked in.

Interestingly, I've avoided using Facebook as much as possible. I keep the profile alive because my siblings expect me to have one and tag me in stupid things I don't allow to actually show up on my wall. I actually log in maybe once every six months because there's nothing to see there, just re-shares and tired memes. Twitter on the other hand I use pretty much daily.

I hope no one buys and Twitter collapses.

I use Twitter. I enjoy Twitter. Twitter does many good things for the world. But it's terrible in a million ways. I'm not sure that it's immediate collapse wouldn't be a net benefit for society.

Let Twitter die. Turn into ash. Let something new have a chance to grow and flourish.

I think Twitter is hoping for a strategic acquisition, based not on financials but on a brand and a vision. I guess this is how their board values the company. Either a buyer would be as enthusiastic about the dream as they are, or they'll realize that the dream is worth a lot less.

It's amazing to me that a product with so much free promotion on TV, in print, and other venues, and that seemingly has overcome many of the early technical hurdles, finds itself in a position where the only viable path forward seems to be an acquisition.

Employee bloat can take down a company of any size. They employ nearly 4,000 people. That's 1/3rd the size of Facebook, yet they have 1/6th the users and the users are of lower value due to shorter engagement times and the smaller amount of data they have to target ads.

Not sure why you're downvoted (you've since added to your sentence; it was just fine alone though). Twitter's has way too many people on payroll. I personally know some buffoons they hired in the past year or so, and I doubt I'm alone.

what roles do these "buffoons" work in? tech?

Perhaps they're Court Jesters?

It wouldn't surprise me to hear some tech company has hired comedians to entertain the staff.

https://blog.twitter.com/2016/announcing-the-twitter-trust-s...

Nice, implying that this council of non-profits and academics (who, I'm unsure, but it doesn't seem like they've been "hired" or are necessarily being paid) aiming to reduce abuse are buffoons.

They always seem to be hiring people for sales and advertising. I've known some people go to them, and from what they've said their ads team is huge.

Hence why they have so much "free" advertising - they likely have a massive department swarming every major media outlet to create and maintain partnerships, i.e. the little Twitter mentions that you see on TV.

I don't know if these kinds of deals cost Twitter money directly (I wouldn't be surprised), but I'm sure their marketing department is the most expensive operation they have.

I personally know a few people on their media team, the ones responsible for these relationships, and it sounds like they have 1-3 people per genre (tv, music, government), at least in the US. The amount of media they get on television alone is likely worth multiples of that if you think how expensive it is to buy tv spots, even if you try to normalize for the "Twitter shout outs." Maybe a lot of resources, but nothing compared to the engineering.

Put enough bright engineers in a room and they'll over-engineer a monstrosity. They probably didn't need as many engineers as they have to scale, but it's entirely possible that they've introduced enough unnecessary complexity into their systems that scaling back down isn't easy or even possible in the short term.

The problem is that they are in a position where they need more moderation in order to enforce their community standards which are not being met.

Might be worth reading: https://news.ycombinator.com/item?id=12626314

Just think if they got rid of 2000 of those, probably free up $200,000,000 in operating costs.

So then they would be operating at only a $300,000,000 loss? ;P

I don't think that the only path forward is an M&A since they have plenty of cash, good revenue, and a reasonable product strategy. Doesn't mean, like any startup with way less traction, they wouldn't consider one at the right price.

Twitter have $4.4bn of current assets, half a billion of current liabilities and $1.5bn of long-term debt. That leaves $2.4bn unencumbered (of which $900MM are trade receivables and prepaid expenses). Meanwhile, they're losing half a billion a year.

Google is saying no to paying $18bn (just under $15bn in enterprise value) for that. I have a tough time valuing it north of $5 or 6bn EV, and that's assuming $500MM in earnings within 6 years (and break-even in fewer than 3).

And 2B in revenue - it's worth it for some private equity firm to come in, pay more than 10B, fire everyone except an essential staff and milk the revenue stream.

That's how I see it as well. A cash cow, a kind of infrastructure that never really adds anything new. Perfect for PE.

I was in their office last year, talking to people who had nothing at all to do with the core product. There seemed to be all sorts of APIs and whatnot that they are trying to push, all of it marginal in relation to what most people think of Twitter.

I wonder how much in costs they can cut if they can quit desperately throwing everything at the wall in order to find more growth (no way are all 4000 developers working on the core product)

Do they have 4k developers or 4k employees?

What happened between this article, and now?

http://www.usatoday.com/story/money/markets/2016/01/25/twitt...

Based on their balance sheet, it seems they have net assets (~$6.6 billion in assets - $2 billion in liabilities) of $4.556 billion. Am I doing the Math wrong?

Two words: revenue stream.

Where Facebook succeeded and Twitter failed was 1) building and growing a massive, highly engaged subscriber base, and then b) monetizing them.

The reality is, Twitter's DAU growth YoY has flat lined at around 300M while Facebook is nearly four times that and growing steadily.

Meanwhile, Twitter user engagement is somewhere around 3 minutes a day. Facebook? 10 times that.

The result: Twitter's ARPU is around $6. Facebook? Over double that, just north of $13 (both US numbers).

So while the media may love to mention them, my view is this is just a reality for the product. It's niche to begin with, and its focused on very small, bite-sized content that doesn't encourage prolonged engagement.

> Where Facebook succeeded and Twitter failed was 1) building and growing a massive, highly engaged subscriber base, and then b) monetizing them.

Twitter only failed at b); its user base should be enough to generate a nice profit.

Wait... Twitter has about 1/10 the engagement of FB but lags in revenue per user by only a factor of 2? I might be going crazy but it sure sounds like you're making an argument for specialness of twitter here.

Depends. If I spend 1 hour on FB - showing me 2 min of ads is easier. If I spend 6 minutes on twitter - with one minute of ads I am not only heavily monetized, but probably you are pushing my ad tolerance limits.

FB could easily double their ad content and still be usable. Is that true for twitter?

Do you actually spend 1 hour per day on FB? And lets not include FB's messenger, since that doesn't count.

Seriously, what do you do for 1 hour per day?

And don't get me wrong, because I've seen some folks spending a lot of time on FB, I've got at least one family relative doing it, but those are the losers that are IMHO only worth targeting by soda and beer companies.

Messenger counts because I prefer to do my chatting on desktop on their website (preference to use keyboard sized for humans not chipmunks). Also you have to somehow fill the time between 9 and 5.

Maybe.. I'm in a different mindset when using Twitter than FB. I use Twitter somewhat professionally, to discover new tools, learn things, follow people that are relevant to my work. I use FB purely for my private personal life.

When I see Twitter ads for SaaS offerings or software tools, I actually read them. On FB, I'm very good at completely ignoring the ads.

That's precisely my experience. I've actually read Twitter ads because, what do you know, those ads are better targeted.

For all the data that Facebook is said to collect, they actually don't have much on me besides friends I barely know, pictures of my child, some political rants and jokes liked.

Twitter on the other hand has a list of people with which I share interests and they can do targeting based on that list. Which is exactly what they are doing and for me it worked. I'm actually amazed that they aren't doing better on paper.

So if I pay $13 a year to use Facebook they'll no longer need to collect my data for advertising?

I doubt it. You're paying cable television and still see ads. They'll always be companies willing to give Twitter money to be able to advertise to them.

But how much would cable cost if the individual channels didn't rely on advertising for profit?

If setting up and maintaining both as supported and fee-based infrastructure had no costs to Facebook and didn't hurt their advertising revenue per ad-supported user, sure, that would be the case.

In the real world, first, setting up and maintaining such a system would have substantial initial and operating costs (and possibly engagement costs, as it would complicate the UX), and, as opt-outs feom advertising would tend to be weighted toward the wealthier, more valuable (to advertisers), users, it would drop per advertising revenue per remaining advertising-supported user. So the buyout cost would have to be substantially more to break even.

They'll never do this.. it is way more profitable to keep your value opaque. The average user might be worth $13 but not you!

Promotion and great tech can't make up for leadership running the entire company into the ground.

It's still a really simple product that could be replaced by a new fad at any moment. Who really expects Twitter to be around in ten years?

Youtube had massive free promotion too but according to the book 'In the Plex' by Steven Levy, Youtube's founders and VC backers knew the only viable path forward was an acquisition. In that case Youtube's massive fees for sending data and lack of advertising system were going to result in continued massive losses unless someone who had a structural advantage in reducing those costs acquired it. Google did: (at the time of the acquisition the book says Google with its fibre and agreements could ship Youtube's data for $83m a year vs c. half a billion for anyone else). Google could also leverage its advertising infrastructure to increase revenues. Given how other commenters are highlighting the massive employee bloat at Twitter, especially in the advertising department, I can see this being the case here too (and am somewhat surprised at the report based on anonymous sources that Google are out of the bidding).

This isn't an accurate comparison, serving video has much higher hardware costs than 140chr text.

I was illustrating another situation where the only viable path forward was an acquisition in response to the parent comment. I was not suggesting that there would be comparable hardware cost savings at Twitter. The comparison which I did make to Twitter was regarding advertising delivery where I said "Google could also leverage its advertising infrastructure to increase revenues. Given how other commenters are highlighting the massive employee bloat at Twitter, especially in the advertising department, I can see this being the case here too (and am somewhat surprised at the report based on anonymous sources that Google are out of the bidding)."

Disney paid $4B for Marvel which had an easy path to profit because of Disney's background. Disney paid $4B for Lucasfilm which had an easy path to profit because of Disney's background. As a shareholder I would be offended if they made an offer even half those prices for Twitter which has a product that isn't even in Disney's wheelhouse. I am confused why Disney is even in this conversation at this point.

They are completely different business models. Twitter has tremendous value and with the right product changes, some rollbacks, I think it can become very powerful and in as much widespread use as Facebook, etc. The problem is is getting someone in the driver's seat who understands what Twitter's place (differentiation, offering) is and then getting that driving.

>The problem is is getting someone in the driver's seat who understands what Twitter's place (differentiation, offering) is and then getting that driving.

Surely, but what cyanbane said was that Disney is not this driver.

> They are completely different business models.

Yes, one prints money the other doesn't even know how and what to monetize

> Twitter has tremendous value

How do you define value?

> They are completely different business models.

They are different business models in the sense that Disney has a business model and Twitter doesn't.

> Twitter has tremendous value and with the right product changes, some rollbacks, I think it can become very powerful and in as much widespread use as Facebook, etc. The problem is is getting someone in the driver's seat who understands what Twitter's place (differentiation, offering) is and then getting that driving.

The problem isn't anything so vague. The problem is that Twitter hasn't ever made a profit and a this point probably won't ever make a profit. And I suspect that this refutes your assertion that "Twitter has tremendous value".

>Twitter which has a product that isn't even in Disney's wheelhouse. I am confused why Disney is even in this conversation at this point.

One can view the Twitter business in multiple ways.

If one sees Twitter as a technology platform that builds on what IRC/XMPP did before, the Disney connection makes zero sense. (E.g. Disney is not a tech company and they wouldn't be the kind of company that would bring back a developer API.)

However, one can also see Twitter as a media entertainment business and the technology platform behind the scenes as an irrelevant detail. Disney does already own the ABC Broadcasting network and ESPN.

Looking at Twitter via the lense of "media outlet" isn't that strange if you look at the top-100 Twitter profiles:

http://twittercounter.com/pages/100

One will notice it's mostly entertainment celebrities including singers Katy Perry (93M), Justin Bieber (88M), Taylor Swift (81M), etc. The list also includes media channels such as Youtube, CNN, ESPN, BBC, etc.

Sure, many people have touted the social ideals of Twitter and its empowerment of user-driven bottom-up journalism. It's a "global consciousness" for news. However, it's interesting to note the relatively low number of followers for famous journalists compared to the entertainment celebrities: Christiane Amanpour (1.8M), Louis Theroux (1.5M), Glenn Greenwald (743k), Malcolm Gladwell (422k), Bob Woodward (15.9k), etc.

If you see Twitter as a media/broadcast business, an acquisition by Google/Apple doesn't make any sense.

If you see Twitter as a technology platform to sell more digital ads, an acquisition by Disney makes no sense.

All that said, we've seen one media company (Rupert Murdoch) buy a web company (MySpace) and that didn't turn out so well for a variety of reasons.

This is a good explanation of why people think it made sense for Disney to buy Twitter, but I don't buy it. The problem with this approach is that Twitter doesn't own any of those big celebrities or have any way of enforcing them staying on the platform.

When you buy the record label that Katy Perry has a deal with, you're buying it because Katy Perry has a deal in place to make N more records for that label.

When you buy Twitter because Katy Perry is on it, you're not getting anything. She could shut down her Twitter tomorrow and tell all her followers she's only on Instagram.

And in addition, why should Disney pay (especially at a premium) for what they are getting for free?

How do we know they wont sign an exclusive deal with KP to only use Twitter for social media?

No matter which way you look at it, Twitter is yet to prove itself as a successful business. They haven't had a positive net income quarter ever, they keep burning through the investors' money. In the last quarter they lost $107M (on $602M of revenue).

https://www.google.com/finance?q=NYSE%3ATWTR&fstype=ii&ei=l2...

I am usually very skeptical for synergy arguments, but Disney could make it work. Twitter as an influence platform is far more powerful than twitter as a profit engine. Disney as a brand is a small chunk of the giant corporation that is Disney the company. If they get a few million / year benefit each across Pixar, Lucasfilm, Marvel Entertainment, Touchstone Pictures, ESPN, American Broadcasting Company (ABC) etc that's significant value.

From the other side they can cheaply cross promote Twitter from all those media companies. Disney has long been about about merchandising not just entertainment, and they are a surprisingly innovative tech focused company.

Arguably, they could get most of this from the data feed for minimal outlay, but owning twitter let's them develop the kind of tools useful for themselves. So, think faster AB testing for commercials not just cash. Much like how Pixar does a lot of software development even though they make money from movies.

I'm not sure what you mean by "Disney as a brand is a small chunk". Name one person that doesn't know Disney or what they offer.

Disney the company owns things like ABC, A&E, and ESPN that are not part of Disney the brand. AKA, if you are watching ESPN you don't think Disney in any way shape or form. https://thewaltdisneycompany.com/the-walt-disney-company-rep...

There is increasing crossover with Star Wars, and Pixar. However, they both started off independent so have strong brand identity on their own.

PS: The only really unifying concept with Disney is entertainment and abusing IP laws to squeeze ever more money from ever blander content.

I'm thinking there could be some nice synergies with ESPN. All of the scoreboards on espn.com provide a twitter feed. All of the team pages do too. The feed provides insight to a game that you'd never experience from your couch.

Twitter also has the rights to stream some Thursday Night Football games this season.

They're a media company, so is Twitter.

Disney is a media company--they sell media.

Twitter isn't a media company. They don't sell media, and in fact they don't sell enough of anything to make a profit.

Well, I believe the idea is a strategic partnership to help Twitter to profitability. But yes, Twitter is a media company.

Well, glad we settled that.

Twitter is analogous to ABC, owned by Disney. ABC sells ads attached to media, so does Twitter.

Disney is a content company; distribution is just a side business (e.g. Buena Vista).

ABC and ESPN (which Disney also owns) has studios and makes their own content; they're not merely distribution channels. Twitter, on the other hand, creates no content of its own.

Twitter is analogous to ABC in the same sense that I'm analogous to Usain Bolt. We both run, but only one of us makes a profit doing it.

> I am confused why Disney is even in this conversation at this point.

Same here. There are a few companies that I could see a good fit with Twitter, but definitely not Disney.

Facebook is an option as their mission is to connect everyone in the world, and Twitter still works via SMS for the billions of people using non-smart mobile devices.

Google wants a social media platform with significant reach (Google+ is still struggling), and I could see Twitter integrating well with some of its other sites like Youtube.

Verizon has been able to squeeze money out of AOL, and currently plans to do the same with Yahoo. Maybe they could figure out a model for Twitter, but it seems like a bit of a stretch.

Apple dabbled in the social media sphere with Ping, and they have built-in authentication with Twitter. It seems unlikely they could ever make money off Twitter, but it seems like the sort of thing they might be willing to waste money on.

How did Verizon squeeze money out of AOL?

Disney owns ESPN. Twitter has an exclusive live streaming deal with the NFL. Buying Twitter gets them access to a valuable media property. They likely aren't buying tweets, but the future of media consumption, due to a pretty strange hedge by Twitter (which Twitter probably can't afford).

My hunch is that a bunch of people have been pumping TWTR up with all sorts of rumors so they can dump it before it craters.

Your hunch is sane because this is basically how the stock market works most of the time :-)

No, it's important to emphasize (in case someone is not familiar), you can be arrested for pumping up a stock while you hold it if you don't disclose your position in every statement about the company you make.

And I'd be remiss to not mention that disclosing said conflict of interest actually makes people trust you more—even though they shouldn't.

So not only does that regulation not accomplish what it is supposed to accomplish, it actually causes the reverse.

Interesting. Do you have a link to a study about this? I personally ignore any research from people in stock positions.

Yes, lots of social science studies have been done on it.

The book Influence: The Psychology of Persuasion by Dr. Robert Cialdini covers this (and similar) phenomenons in detail. Huge eye opener.

> I personally ignore any research from people in stock positions.

I (and everyone, if asked) agree that's the rational thing to do. But most people don't behave that way in practice, unfortunately.

I don't have a good solution, the law benefits people like you and I who will act correctly on the information, but hurts people who are vulnerable—those who acts incorrectly on the information.

There is a proxy between believing that the person who purchased the stock and disclosed the position as honest enough to put skin in the game for the company they believe in, and mistaking it for simply this person's confidence of their ability to fool others.

This article is about the same phenomenon in the context of doctors recommending treatments they specialize in, disclosing their likely bias towards that treatment, and that disclosure making it more likely their patients take their recommendation: http://www.nytimes.com/2016/07/10/opinion/sunday/the-paradox...

is there a similar set of penalties for a company, say Google, saying that they won't buy with the express intention of this reducing the value so that they can in fact buy?

I was reading recently about the St Jude Medical incident where their stock was shorted by a company that produced a paper on security vulnerabilities in their products. This is currently going to court.

I wonder whether it's the same in all scenarios?

There comes a point where it's just negotiation and gambling. If I don't want to buy your burning house because I think you want too much it's fine for me to wait because I know the price will likely come down. There is always a chance that somebody else will grab it before my trigger point, but that's the gamble.

My guess is they have an LOI (probably from SFDC), probably at a pretty significant valuation, and the board did what they should have and decided to shop it (they may have leaked on purpose to start a bidding war). The other suitors came to the conclusion that the range was more than they would pay and dropped out.

My hunch is that's not happening.

Too bad. While Google has a rep for dropping product lines (have they ever killed a product-via-acquisition of significant size, vs. things like Reader/Buzz?), Twitter seems like it could easily add to Google's core data and revenue work, even without Google doing much additional work. I'm assuming Google's current access to the Twitter firehose is already being used or at least studied for a SERP signal. Twitter's social network provides additional ways for Google to facet and classify data. It also seems possible that Google could improve advertising on Twitter enough so that it's not just a money pit.

I don't know enough about Salesforce beyond a few of its products to imagine scenarios where Twitter has comparably low-friction integrations. Unless Disney makes a concerted effort to give Twitter autonomy...can't see how they could leverage it into something that's not just a loss-leader for entertainment. Maybe additional branding opportunities for ESPN and athletes, as well as another way to broadcast events?

edit: Any reason why Amazon isn't in the mix? Other than the obvious reason that they haven't made noise about it? Would an acquisition of Twitter's size be too unwieldy for Amazon?

Orkut. Which was a social media site with 300 million users. Same number as twitter.

That number's not correct.

What is the correct number?

The userbases are definitely comparable, even if the impact and potential revenue differs -- Orkut did not have the same reach in the U.S. as Twitter currently does. Also, AFAIK, Orkut was always a part of Google? I was thinking along the lines of, has Google shut down something that they paid billions to acquire? In terms of pure dollar amount, assuming that Twitter will go for at least a billion, only YouTube, DoubleClick, and Nest are in that neighborhood.

Too soon to make a verdict on Nest, but YT and DC seem to be the kind of acquisitions that Google paid a lot for, and from which Google advanced its bottom line and reach. FeedBurner ($100M), on the other hand...$100M is not nothing, but not as major as a Twitter acquisition would presumably be.

(AFAIK, Feedburner is still alive, but the APis have been deprecated a few years ago)

Orkut was always part of Google, it was created by a Google employee (Orkut Büyükkökten) as his 20% project.

That's probably the issue (for them). Most of the Twitter data is public and so they don't have that exclusivity like LinkedIn or FB. If Twitter shutoff the firehose and made all their data private like FB (i.e. only followers can see the updates and no scrapping allowed) then their valuation might have be twice or more of what it is now. I think companies like Google should be worried about this. Their new suitor can decide to put up wall to Twitter data and put them at disadvantage. Note that doing this doesn't affect their non-tech users because they continue to follow and get updates as usual.

Twitter already shutoff the firehose [1]... and it doesn't seem like that doubled their valuation.

Also, twitter's data was never truly public: you can follow tweets on some topics, but a proper deal with twitter is needed if you want access to the firehose (so it wasn't just under some pay-for-play API).

[1] http://www.forbes.com/sites/benkepes/2015/04/11/how-to-kill-...

I still don't really understand why Twitter's growth slowed. It was their's to not mess up, but then straight down they've gone. How annoying.

In any event, based on their current projected growth rate (27.51%), full year 2015 revenue ($2,218,032,000), and 2015 profit margin (25.15%) (which is likely BS, as they seem to be losing money), it seems they are worth about $8 or $12 billion.

One way to determine valuation is to divide growth rate by 10, add 1, then multiply in yearly revenue (27.51 / 10 + 1 = 3.751; 3.751 * $2,218,032,000 = $8,319,838,032). Or, as seems to be the trend recently, one could divide growth rate by 10, double it, then multiply in yearly revenue (27.51 / 10 * 2 = 5.502; 5.502 * $2,218,032,000 = $12,203,612,064).

These estimates usually assume 30% profit margin, so one can factor that out (as Twitter's seems to be ~25%) by applying the scaled multiple to "profit" (27.51 / 10 + 1 = 3.751; 3.751 / .3 = 12.5; 12.5 * $557,807,000 = $6,972,587,500) (27.51 / 10 * 2 = 5.502; 5.502 / .3 = 18.34; 18.34 * $557,807,000 = $10,230,180,380). One would then add in Twitter's estimated net assets (~$4.556 billion) to get a final estimated worth.

That is, Twitter is worth either $11.53 billion, or $14.79 billion (depending on how you look at it). As their market cap is $17.25 billion, and the media is suggesting offers are in the range of $25-30 billion, it's likely any acquirer will pay much much more than Twitter is worth, or all potential bidders will bow out, as Twitter's asking price is too high.

Also, no matter how you look at it, Twitter's employee count seems to be ~2x what it should be. So, either there'll be a large number of layoffs, or they'll have to stop hiring completely and "ride the wave" until their revenue/potential increases to be inline with their employee count.

Even just looking at what Twitter does, it's hard to see why 4,000 employees are needed. WTF are they doing? It's just another sign they are likely being thoroughly mismanaged. This is further supported by the abysmal senior management rating (3.2, versus a target of 4.0 or 4.2) they received on Glassdoor.

Does anyone else think Amazon will come sweeping in at the last moment and make an offer? Bezos already owns WP and Twitter has a significant user base of media outlets.

Note: WP = Washington Post, not WordPress.

Confused me there for a second.

Used to it being abbreviated WaPo, helps avoid the confusion

It's actually not a terrible fit for Amazon. Twitter is basically where breaking news happens already, and it's not terribly difficult to imagine an integration between WaPo and Twitter. Gives them a presence in San Francisco as well, and access to Twitter considerable UX/frontend talent, which they can put to use on making AWS more intuitive to use.

I guess there is the issue of WaPo being owned by Bezos directly though, not Amazon.

That talent will leave twitter.

and access to Twitter considerable UX/frontend talent

I don't want to insult anyone or anything, but is Twitter frontend that impressive really?

I think it used to be impressive when they created Bootstrap.

Twitter's website currently is not Responsive. The web interface looks different on every platform (mobile, tablet, desktop). And on mobile, the website is terribly slow.

Plus, it doesn't highlight a much used feature: search

Right now it's hidden behind a magnifying glass.

I don't find the clickbaity trends they highlight on the homepage very interesting. The content is mostly the same as the MSN homepage.

Just let me search for things I find interesting.

Plus, search can be monitized way better, because you know for sure what the user is looking for.

Sadly, their search doesn't work very well: https://news.ycombinator.com/item?id=12646580

It's slow and not all that reliable on desktop as well...

It's at least usable on desktop. Try going to mobile.twitter.com on a phone... it's shockingly slow.

i've often wondered if they deprioritised the mobile web frontend in order to get people to install their app (especially since they turned hostile towards third party apps). personally, it just took twitter from something i used to check frequently to something i check once or twice a day when i'm in front of a computer.

If you have a moderality complex UI, by making it responsive you are going to ruin it. That's why most serious websites with complex UIs don't bother with responsiveness and have two different interfaces.

This could be debated, atomic components within a framework built for a purpose can still be responsive.

Responsive or adaptive should be choice made at the start of projects and then ideally followed through till the end.

We choose responsive and made atomic components so it can work, but... it has to be in the thought process from design to implementation, the same can be said about adaptive.

Source: Our UI is complex, large, responsive and serves 3 million users and won awards.

Well, Bootstrap comes out of twitter, and for awhile everyone was using that, so that's pretty considerable.

I would not call Bootstrap a UX masterpiece. It's just a bunch of primitively styled elements, no real UX there.

I remember low-budget sites before and after bootstrap, and I gotta say that post-bootstrap is way more usable. While you can mess things up with Bootstrap, the limitations help guide you to settle on standard decisions (like their nav bars, verses whatever cute creative thing people would do on their own).

So when you see a website built on bootstrap, you think "oh, that's impressive design" as opposed to "oh, they didn't have any time or money to spend on design"?

The Bootstrap guys (@fat is one of them) joined Medium.

Not best in class, but better than Amazon.com...

Is twitter UX considered good? Because my impression is that it's one of the worst UX ever made and has been that consistently for years.

Just one example, trying to view an image on twitter: on the timeline images get cropped to some fixed aspect ration, if you click on them twitter will open its weird mediaviewer popup where the image is not cropped but it is resized to fit an even smaller rectangle. As far as I can tell the only way to see the image at its original resolution is to (1) click on it to open the mediaviewer pseudopopup, (2) right click on the image inside the mediaviewer pseudopopup, (3) select "copy image location", (4) select the URL bar, (5) paste the image URL.

And that's just one example that you would think is easy to fix but apparently isn't, there's many more (threading is shit, clickable areas are unnecessarily huge, sometimes keyboard arrows stop scrolling, there's no distinction between "talking about someone" and "talking to someone", two different "screen name" fields with one or the other being given prominence depending on context...)

You figured out more about how the twitter UI than I ever have. It's a hot mess and I just don't visit the site at all since I could never figure out what the heck I'm looking at.

Disney is out too:

http://www.recode.net/2016/10/5/13181704/disney-twitter-buy-...

Tomorrow is going to be an interesting day for TWTR.

Twitter brings a lot of political heat in countries where Google does business. At first I was baffled by Google's unwillingness to bid. But now I suspect owning Twitter may be bad for business and they don't want the headache.

Why would they buy Twitter when they can easily create a new product, called Google++ that everybody can use and love?

Creating a new product that everyone will use and love is not so easy, even for Google.

It's not like Google Wave Or Google+ took the world by storm...

Considering how (pathetically) they have failed at previous social networking products (own + acquired ones), I won't be surprised if they're not ready (at least yet) for another attempt (and a fairly expensive one at that).

You left off your sarcasm tag. Now look what you've done!

But the obvious abbreviation (G++) is already the Gnu C++ Compiler.

It should be Google#.

This is how the web and app bubble pops. First Yahoo went under, now Twitter, and I suspect Uber will be next. It turns out that, yes, you really do need a profitable product, and no, you can't just hand-wave that away with "expectations of future earnings."

Uhhh, UBER next? Maybe you need to read their financials and get back to us. UBER is one of the most profitable companies ever to exist. 12 billion in revenue, 2 bil of that is profit.

You need to check your sources. Uber is hemorrhaging money and lost 1.2 billion dollars in the first half of this year alone.

https://www.bloomberg.com/news/articles/2016-08-25/uber-lose...

^ This is completely irrelevant and as the article you have referenced clearly explains, this loss will not be a problem come the 2nd quarter. This loss was due to the struggle in China, which now has a solution.

1) Twitter is known to be a weak player in the market, people have been talking about this for years.

2) The "app bubble" is a gross oversimplification. Uber is a world away from Twitter in product and profitability.

Only a few months ago, shares were at $14 plus change. Not much hope of significant profit in the near future. Perhaps some Chinese investors flush with capital might entertain an offer. Tencent?

Right now it is around $25, the highest it has been for a year.

Where is the "plummet" on this 5d chart ?

https://uk.finance.yahoo.com/echarts?s=TWTR#symbol=TWTR;rang...

Look again.

Stock market opens at 9:30am.

oh right, thanks. damn

If nobody buys Twitter the stock will take a dive, right? Is this possibly that reality check on the true value?

Not necessarily. The market determines the price. The company may be overpriced (according to the market) if no one wants to buy it.

Kinda, the price will decline until someone makes an offer to take them out, that might be Google. Why make a bid until the price floor is established?

If I were to open a market position on TWTR, is the stock price still hyped and would it be a good time to short to stock? Looks like the stock could reverse it's uptrend from the previous months and reach the 10-15 range again.

>>If I were to open a market position on TWTR, is the stock price still hyped and would it be a good time to short to stock?

That depends. How confident are you that you have information, or a source of information, that has not been priced in by the market yet?

Respectfully, if you are asking that question you probably don't have enough info to warrant doing this unless you like to and can afford to gamble.

At this point yes, it would be pure gamble. I thought there might be objective information that could have come out of this post :) Then, I would take a rational decision.

If there is a rational decision based on publicly available information, it has almost certainly been priced in already. Honest advice: always be aware that it's gambling (and it seems you are). Look to index funds or similar for relatively stable growth.

Don't short the stock. You'd buy options for strike prices your predict the security to reach. This limits your liability (unlike shorting a stock, which has unlimited liability).

The question is: how many people are already doing something like this? The stock has already started to move down so unless there is more news on the way it may not move much in the near term.

4.85% of its float or 2.2 days of its average daily volume [1]. That compares with the S&P 500 SPDR's 2 days [2].

[1] http://shortsqueeze.com/shortinterest/stock/TWTR.htm

[2] http://online.wsj.com/mdc/public/page/2_3062-nyseshort-highl...

Shorting a stock this volatile is an insane idea imo. You could wake up tomorrow and Microsoft decided to put a bid on Twtr and the stock prices gaps up so hard you lose your shirt.

If you want to short something like this, take a look at put options instead as your liability is explicit.

pre-market it's down ~17%, so I think you missed your window.

Pichai Sundararajan has brought some much needed discipline to Google's M&A spree. Good to see that he is not plowing more money into ego driven acquisitions.

Interesting. I'm a bit surprised I'd imagine they'd be interested in taking it over. What do others think?

How would they generate ROI on the investment? Google has no track record with social media, if anything they lack creativity more than Twitter does. There is also no argument for a supplementary role to their other product lines.

Twitter just has to be allowed to be Twitter and not some amalgamation that competes with Facebook in usage metrics when it's an entirely different experience. I know, whatever was on those slides promising the world to early investors are going to make for a hard pill to swallow, but Twitter is reasonably successful imo.

Seems like all they'd have to do is add value to advertisers using the existing ad-word engine. The plan is always the same for any internet holding - build up user base, then invest heavily in the advertising engine to add value for the true customer, advertisers. If you listen to FB conference calls, it's always "we want to build the service to over a billion users, then we'll work hard to create the ad engine to get advertisers as much value as we can."

Sure, but with flat lined subscriber growth and very low user engagement, it's very tough to build a revenue growth story built around ad revenues.

Why does everyone assume they need growth? I'd be plenty happy to have a company with a 2B revenue stream, call options on other assets in Fabric and Periscope and there's like 0 secular decline.

public market demands growth, and people don't invest in stagnation

> I'd be plenty happy to have a company with a 2B revenue stream

They're losing $500MM a year...

Yup. Plus they have negative 2 billion in retained earnings, a lot of long term debt, about 20% of total assets are goodwill and intangibles, and if they eventually have to do a stock offering to raise capital it will be a bloodbath for current holders.

Which is why it will end up in Bing.

Same way as Youtube. 1. Make advertising massively more efficient by using adwords 2. Cut IT costs dramatically by leveraging existing infrastructure and knowledge 3. Make search more effective to increase user engagement 4. Continue to use Twitter's firehose to improve Google search results about new items and therefore drive revenue to Google's flagship product (they have an agreement in place with Twitter to do since 2015 so but if MSFT buys TWTR that's not going to last and suddenly Bing gets an advantage in generating relevant search results on rapidly emerging issues).

I think any company with the resources of Google owes it to themself to at least listen to the pitch. Twitter, while struggling to make money, still has business potential/value.

Recode reporting Disney is out as well.

Whoever ends up acquiring it, will do so as a proxy for Palantir or other intel gathering endpoints. Twitters only true value is in the amount of data/intelligence it can contribute to the puzzle that is linkability in the intelligence communities.

Where "plummet" means "reaches 12 month high"

https://uk.finance.yahoo.com/echarts?s=TWTR#symbol=TWTR;rang...

Down 18% at the open.

stupid yahoo :)

they should buy Twitter

Advice to Twitter:

1. give on on this acquisition thing for now

2. fire half your staff - what do all those people do?

3. you're a utility - charge for it. One penny per tweet would equal $2 Billion in annual revenue

4. after #3, there's no reason not to invite 3rd party developers back to the party

>One penny per tweet would equal $2 Billion in annual revenue

I think you're overlooking the fact that if they began charging to send tweets, volume would probably drop to less than 1% of what it is now. Even 1% is likely a generous estimation of the percentage of their userbase that considers sending tweets to be indispensable enough to pay for it.

Yea. Maybe find a way to charge only the power users with 100k+ followers. Not sure how many of those there are, but generally speaking they tend to have the money to spend.

I don't think there's any correlation between power users and income. Some of the most popular Twitter users are not wealthy.

> 3. you're a utility - charge for it. One penny per tweet would equal $2 Billion in annual revenue

Seeya. The biggest mistake Twitter could make is to "charge for it." They'll realize in a hurry that they're expendable entertainment.

I bet they'd lose those users in a day if not hours. That is a really really bad idea for reasons that you already mentioned and so many more.

They're a free marketing channel for celebrities (and businesses) with large follower count. They monetize those users indirectly by showing them ads of course. But a case can be made to charge some money from the celebrities themselves for value add services (e.g., personal customer service, subtle advantages in placement of tweets in user's streams etc. Lots of these tweeple/tweepanies would be willing to pay, say $20 a month for value added services leading to better engagement.

There's also a really interesting monetization model of users rewarding each other for exceptional posts with virtual goods. Reddit gold seems to be a successful example of this model. Twitter is a public square just like reddit. They should try this model.

This is probably closer to a viable revenue model. Don't charge per-tweet, rather charge people who have a large follower count to broadcast a tweet to all of their followers. Free tweets go to the top X% or 1000 followers, whichever is greater, and to truly broadcast to a million followers costs money. Something similar to what FB does for posts from pages that you once, in the distant past, liked; page owners complain about this to no end, but they keep paying...

That would break the followers expectations that when I follow someone I expect to get their tweets. Facebook is already pulling this crud and it's annoying.

It doesn't even have to be a "not deliver" model. It can simply be a matter of "deliver harder" for paying celebs/companies. Not as hard as a promoted tweet but not as ignorable as just a regular tweet scrolling past the bottom edge of the screen. There can be special pricing for highlighting tweets or "temporal persistence" of tweets.

They could just charge an annual subscription. If people love and need Twitter to the extend they claim, $20 per year should be to much to ask. For business accounts they could go high, $250 should be reasonable.

As a bonus, charging a yearly fee would greatly reduce the need for moderation and pretty much solve the problem of "fake followers".

The problem of cause arises if it turns out that Twitter isn't actually providing most people any real value for the subscription.

I totally agree with this. It would also drastically reduce their need for advertising infrastructure. Or: offer an ad-free experience for $, and an ad-based one for free.

I wish more sites would do this. IBM does it through the Weather Underground site and I subscribe.

Is this shocking? Who would buy a company in a public auction, it seems idiotic.

Maybe Samsung will buy them.

Maybe Donald Trump will buy it, he seems to be a fan of the service.

Gossip about famous people and flamewar topics are expressly forbidden.

A perfect example of Twitter's problem actually. It's a great platform for witty famous people and their fans, but that does nothing to put money into Twitter's pocket.

never heard trump and witty in the same conversation

This thread went from 2nd most voted to killed immediately. dang, what can you tell us about this? https://news.ycombinator.com/item?id=12651429 (you need showdead=yes in your profile to see it)

HackerNews has started to feel a bit like Twitter lately.

They love it when eyeballs write content for free.

They hate it when it isn't exactly what they'd have written themselves.

Saying a well-liked company should fail does not go well around here, especially when they make wild, conspiracy-like accusations with absolutely no supporting evidence.

Twitter chose this long list of liberal-leaning associations to "police" the community. I don't think it's a conspiracy-like accusation to say their moderation leans to the left. https://blog.twitter.com/2016/announcing-the-twitter-trust-s...

Except that:

1. Those organizations aren't there to "police" the community. Here are Twitter's actual words about what they're meant to do:

"The Twitter Trust and Safety Council provides input on our safety products, policies, and programs."

Notably not listed there: having any direct power over the Twitter community.

2. The reason why Twitter introduced this thing is that they were getting a lot of flack from people and groups who "lean to the left", for allegedly being a cesspool of the sort of abuse that people and groups who "lean to the left" get most upset about, and not doing anything about it.

I don't know whether those accusations were 100% wrong, 100% right, or somewhere in between. But when a company is attacked for doing or allowing something allegedly bad, it's hardly a surprise if the people it gets onside to try to show it's addressing the problem are the sort of people who most disapprove of whatever it was.

Seems pretty obvious to me: a combination of (1) gratuitously political and (2) gratuitously hysterical. ("Progressive-supremacist"? Really?)

It's only moral supremacy, not sure that counts.

The votes were going up and down pretty quickly and hard, HN has a well-established policy of killing controversial threads and submissions.

I don't blame the mods for killing it, and nobody should jump to conclusions or accuse censorship. I think it's perfectly understandable.

We don't kill comments except when banning users (and in nearly all cases we'll say that we're doing so), and have well-established policy of not doing that. When a comment is dead and says [flagged], it means that users flagged it.

The headline is flat out wrong, TWTR is the highest price it has been in a year

Twitter are missing out, they could have become the next Buzz!

They said Google won't make a bid. But Alphabet ($GOOG) can absolutely make a bid.

If Google is going to develop a crappy product, they will do it in-house thank-you-very-much.

http://gab.ai/ is bleeding users off as well.

Maybe Saudi Arabia is going to help out Jack Dorsey. After all they seem to align on freedom of speech issues.

Additional bonus for Saudi Arabia: They could make it an even better ISIS recruitment tool than it already is.

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