The funny thing about Twitter (NYSE:TWTR) is that almost every quarter, there is a rumor that a big company is going to be taking it over. Of course, we’ve heard of the rumor of Google and Facebook buying out the microblogging platform. However, other potential suitors range from Alibaba to Softbank to even Amazon. Even Apple has been mentioned as a potential suitor for Twitter. What is it about this microblogging platform that generates so much hype, buzz, and wishful thinking?
Maybe it is the fact it is one of the most established brands in the digital mobile age. Unlike Facebook which has had to buy its way into relevance into the mobile age, many mobile users use Twitter. In fact, a large chunk of Twitter’s content updates is produced by people who use mobile devices. It has deftly navigated the shift from the social network and social media to the mobile age and possibly beyond. It has a lot going for it. It’s an established brand. People are either very loyal to it, or they burn out quickly.
With that said, Twitter is not exactly an unqualified success story. It’s still not making money. Putting aside the fact that its management has laid out a solid strategy for containing its costs, there is one big cloud regarding such cost containment plans: There is no clear strategy as to how Twitter will reduce its stock option-based expenses. It spends hundreds of millions of dollars every single year on stock compensation, and this is dragging the company’s overall income. It’s still in the red.
It remains to be seen how any buyer would actually make Twitter an important and income producing asset. It may make for a great reputation play, but chances are the company with the resources to buy Twitter probably already has a reputation and a solid brand.
This is why it really puzzles me why all these rumors keep getting trotted out quarter after quarter. Maybe it’s just wishful thinking on the part of technology investors who bought Twitter closer to the $50 mark than the $40 mark. Who knows?