Twitter is trending – with four of the biggest companies in the world, including one (on the surface) very unlikely candidate. Who comes out on top in the battle for the bird? Take an in-depth look at the reasoning behind why these tech giants are interested in Twitter.
Twitter Buyout – Google, Salesforce, Microsoft, and Verizon All Bidding For Twitter
There’s an awful lot of talk going on about Twitter Friday.
The microblogging company has been struggling to grow (and even retain) its user base, seen shares plummet, and dealt with cashflow issues in 2016, making Twitter a ripe acquisition target.
The company has made some great strides lately, especially by partnering with the NFL to stream Thursday Night Football games, but at this point a buyout seems inevitable.
Now the question is, who gets to acquire Twitter?
With a market cap of $13.3 billion, Twitter can only be targeted by a handful of companies. But boy those companies are all some heavy hitters.
According to multiple sources, there are four competitors: Google, Microsoft, Verizon, and …. Salesforce?
Let’s take a look at each company’s interest in Twitter and the odds of a deal happening.
Google and Twitter makes a lot of sense. This seems to be the obvious marriage. Google has the biggest bank account — $73.1 billion — of any of the companies in the conversation. And parent company Alphabet, Inc. is not shy about investments and acquisitions.
Then there is the social aspect. Google made a play into the social media space with Google Plus, which never really picked up any steam. Since then, Google’s biggest social media strength has been YouTube. And while YouTube sees lots of traffic and ad revenue, it’s not as “connected” as Twitter.
Odds of acquiring Twitter: 3:2
Verizon is looking to be more than just a telecommunication company, as evidenced by the company’s recent acquisition of AOL and currently ongoing acquisition of Yahoo. Verizon wants to stay in front of people and be a dependable source users flock to for news and information. Then Verizon would be able to monetize those users through ad space.
There’s definitely synergy in Verizon acquiring AOL, Yahoo, and Twitter. All these online spaces have user bases and messenger functionality.
Is there a shared vision between the properties? Most definitely.
But the better question is, Can Verizon handle three major ongoing acquisitions at once?
Realistically, it’s doubtful.
Odds of acquiring Twitter: 7:1
Salesforce is the surprise player here. On the surface, there doesn’t seem to be much reasoning here. However, Salesforce actually makes the MOST sense of any partnership with Twitter. While the company’s focus is on cloud based enterprise tools and services for companies, one area in which it’s lacking is chat functionality and customer support. Twitter could be useful there.
And did you know CEO Marc Benioff tried to buy Linkedin as a social network to utilize? Unfortunately for Salesforce, Microsoft won out on that bidding war and is acquiring LinkedIn for $26.2 billion.
Odds of acquiring Twitter: 4:1
Truthfully, Microsoft shouldn’t be on this list. But the company is in the conversation for Twitter so here it is – Microsoft is just trying to drive the price up on Salesforce.
The company is acquiring LinkedIn (having outbid Salesforce) for $26.2 billion, and won’t be looking for another social network. The only exception to this thinking is that Microsoft wants to regain relevancy with millennials and a younger audience by acquiring Twitter.
Odds of acquiring Twitter: 20:1
Regardless of who wins out here, shareholders are extremely happy about the news, as shares of Twitter (TWTR) soared 21.42% Friday.
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Stocks Plunge Again, Jobless Claims Surge to New Record
The stock market started the second quarter the same way the first quarter ended, with significant losses across the board.
The Dow Jones Industrial Average, S&P 500 and Nasdaq all slid 4.4% yesterday as investors braced for more bad news about the spread of the coronavirus and historical jobless claims due to the outbreak.
President Donald Trump warned that a “very, very painful” two weeks lie ahead for the country as it faces a rapidly spreading COVID-19 outbreak that is approaching 200,000 cases here in the US.
With uncertainty over how long the country will be shut down in an attempt to slow the spread of the virus, it’s becoming virtually impossible to predict how the market will perform going forward.
“Everything hinges on how long we are in this shutdown,” said Anwiti Bahuguna, head of multi-asset strategy at Columbia Threadneedle Investments, in an interview. “We don’t know how long the shutdown may last, so it’s hard to predict what U.S. growth will look like.”
Adding to the misery on Wall Street, this morning’s initial jobless claims report showed that a record 6.6 million Americans filed for unemployment insurance last week.
That dwarfs the then-record 3.3 million new filings reported two weeks ago, and brings the total claims to nearly 10 million in the last two weeks due to the coronavirus outbreak.
For comparison, today’s numbers were almost 10 times higher than any previous report prior to the coronavirus outbreak.
Excluding the last two weekly reports, the highest week for claims was 695,000 in 1982. And as miserable as the job market was during the Great Recession, the highest number of jobless claims during that period was 665,000 in March 2009.
“We’ve lived through the recession and 9/11. What we’re seeing with this decline is actually worse than both of those events,” said Irina Novoselsky, CEO of online jobs marketplace CareerBuilder.
The lone bright spot in the markets is oil, as the price surged 10% after President Trump mentioned the possibility of a truce in the price war between Saudi Arabia and Russia.
West Texas Intermediate (WTI) futures jumped $2.11/barrel to $22.42 on the seemingly good news.
“Worldwide, the oil industry has been ravaged,” Trump said during a media conference on Wednesday. “It’s very bad for Russia, it’s very bad for Saudi Arabia. I mean, it’s very bad for both. I think they’re going to make a deal.”
Trump added he expects both countries to end their price war within a “few days” meaning they will slow production and bring prices back up.
The president also invited the heads of US oil companies like Exxon Mobil and Chevron to meet with him at the White House to potentially discuss how Washington can help the companies get through the current crisis as they face bankruptcies and massive layoffs.
“I’m going to meet with the oil producers on Friday. I’m going to meet with independent oil producers also on Friday or Saturday. Maybe Sunday. We’re going to have a lot of meetings on it,” he added.
Next Wave of Stimulus Could Be $2 Trillion Infrastructure Bill
“Phase 4” of the government’s economic stimulus plan could include spending up to $2 trillion on improving America’s infrastructure.
The bill already has bipartisan support, and could be voted on as soon as April 20th when representatives of both the House and Senate return to Washington, D.C.
During his 2016 campaign, President Trump said he would make improving America’s roads, bridges and airports a top priority during his time in office.
“The only one to fix the infrastructure of our country is me – roads, airports, bridges,” Trump tweeted on May 12, 2015. “I know how to build, [politicians] only know how to talk!”
While previous attempts to pass a major infrastructure bill have failed, both sides seem willing to try again in an effort to help America’s economy rebound from the coronavirus outbreak.
House Speaker Nancy Pelosi, who is often at odds with the President, said she is “pleased the president has returned to his interest” in the issue. She called an infrastructure proposal “essential because of the historic nature of the health and economic emergency that we are confronting.”
She added “I think we come back April 20, God willing and coronavirus willing, but shortly thereafter we should be able to move forward.”
The Democrat’s proposal is part of a five-year, $760 billion package that includes money for community health centers, improvements to drinking water systems, expanded access to broadband and upgrades to roads, bridges, railroads and public transit agencies.
The plan designated $329 billion for modernizing highways and improving road safety, including fixing 47,000 “structurally deficient” bridges and reducing carbon pollution. It also aimed to set aside $105 billion for transit agencies, $55 billion for rail investments such as Amtrak, $30 billion for airport improvements and $86 billion for expanding broadband access.
“I could provide the legislative language in very, very short order for this package. It’s the funding that’s been holding us up, and if the president insists on funding, then I believe that Senator McConnell and Leader McCarthy will move on this issue,” said Democratic Rep. Peter DeFazio of Oregon, who chairs the House Transportation and Infrastructure Committee.
During an appearance on CNBC yesterday, Treasury Secretary Steven Mnuchin said he is talking with Congress about a potential infrastructure bill.
“As you know, the president has been very interested in infrastructure. This goes back to the campaign: The president very much wants to rebuild the country. And with interest rates low, that’s something that’s very important to him.”
He added “We’ve been discussing this for the last year with the Democrats and the Republicans. And we’ll continue to have those conversations.”
Earlier this week President Donald Trump said he wants to spend $2 trillion on a massive infrastructure package.
He tweeted that “With interest rates for the United States being at ZERO,this is the time to do our decades long awaited Infrastructure Bill. It should be VERY BIG & BOLD, Two Trillion Dollars, and be focused solely on jobs and rebuilding the once great infrastructure of our Country! Phase 4.”
“The president very much wants to rebuild the country, and with interest rates low, that’s something that’s very important to him,” Treasury Secretary Mnuchin added.
Stocks Will Head Lower, Warns Billionaire Bond Investor
Billionaire bond investor and DoubleLine Capital founder Jeffrey Gundlach is the latest Wall Street veteran to warn that the worst is yet to come for stock prices.
He joins famed investor Jim Rogers, who said on Tuesday that he expects the market to stay elevated for a while, but ultimately another stock market route is on the way.
“I expect in the next couple of years we’re going to have the worst bear market in my lifetime,” Rogers said in a phone interview.
Gundlach may not be as bearish as Rogers, but he did say earlier in March that there was a 90% chance the United States would enter a recession before the end of the year due to the effects of the coronavirus pandemic.
In the short-term Gundlach said during a webcast on Tuesday that he believes that the lows we saw in March will be eclipsed in April due to the uncertainty around the coronavirus outbreak and when we can expect the number of new cases to slow.
“I think we are going to get something that resembles that panicky feeling again during the month of April,” while adding “The low we hit in the middle of March, I would bet that low will get taken out.”
Mark Hackett, chief of investment research at Nationwide agrees with Gundlach and warns that there is compelling evidence that nearly every bear market has a few rallies before plunging lower.
“Last week’s double-digit gain for markets was a welcome relief rally, though market bottoms are rarely as clean as this one has been. In 2000/01, there were four rallies of greater than 20% before ultimately reaching a bottom, and in the financial crisis, the S&P 500 had a false breakout of 27% before hitting a bottom.”
Gundlach also said that any projections that the US economy will quickly recover once the spread of the virus slows were too optimistic and that the hopes of a quick recovery were causing the markets to act “somewhat dysfunctionally.”
“We will get back to a better place, but it’s just not going to bounce back in a V-shape back to January of 2020,” he said.
Gabriela Santos, JPMorgan’s global market strategist agrees with Gundlach that we aren’t going to get the quick “V-shaped” recovery that most are predicting.
She believes that we’ll start a slower “U-shaped” recovery once coronavirus infection rates peak.
“A ‘V-shape’ I think we should unfortunately discount at this point, because even when infection rates peak for COVID-19 around the world, what the China experience is teaching us is even though the government begins to relax some social distancing guidelines, individuals themselves are still very careful about how exactly they go back to their day to day lives,” she said.
“So demand was quick to shut down, but it’s actually much slower to come back online,” she added. “The better analogy here is a U. There’s a very sharp drop in activity in the first half, there’s a bit of a stall in the second, and then in 2021 is when that strong rebound begins.”
Stocks Soar Again, Yet Doubt Remains That This Rally is Real
Oil Prices Drop As Doubts Grow Over Oil Deal
Trump Threatens Oil Tariffs, Prices “Probably Going to Crater”
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