Rumors about an acquisition of Twitter are circulating — again.
Twitter shares spiked by as much as 4% on Tuesday amid gossip in the investment community that the company had hired advisors — reportedly including Goldman Sachs — to deal with takeover bids.
The stock was hovering at just shy of $53 a share as of publication, up more than 45% for the year to date and inching close to a 52-week high for the company.
A lot of shares were also trading hands, with a volume of 29 million shares traded today, compared to the average of 17 million shares a day.
It’s clear that there is an unusual amount of interest this year in Twitter’s stock, in marked contrast to the stock’s fall last year. That interest could come from investors’ belief in a takeover or a number of other factors, including Twitter’s attempts to spiff itself up.
Twitter’s options, which are a sophisticated way to bet on a company’s future stock price, look very active for April. The Chicago Board Options Exchange (CBOE) cited Twitter as one of the companies whose options were rising in volume on Tuesday, indicating more interest by investors betting on Twitter’s future price.
There is a particularly large cluster of interest in betting on Twitter’s stock price for April 17, when there is open interest in 35,163 contracts betting Twitter’s price will be attractive at $47.50, according to an investor with access to Bloomberg data. Normally, Twitter options contracts are in range of 2,000 to 5,000 contracts per day. That would make the April 17 date the highest open interest in Twitter options since at least January, at least within the band of $46 to $48.
On Twitter, which, conveniently, is the most effective tool for gossiping about Twitter, some speculated that Google would be the likely suitor, which might sound like déjà vu, since the same rumor was floated earlier this year — and a few other times.
As Fred Wilson, an early Twitter investor, put it in 2012: “Google is focused on G+ and Twitter is focused on building its business and staying independent.”
Then again, that was before Twitter went public and before Google appeared to back away from Google+.
Yes, Twitter could help Google get more real-time information, but the two companies are already partnering on that effort. It’s also worth noting that Twitter’s current market cap is north of $30 billion, or about $20 billion more than Google’s largest acquisition to date.
More recently, investor Dan Niles, who had been betting against Twitter for years, abruptly turned his opinion about the stock to a positive one, arguing on CNBC that “Google is really pretty much getting killed in the social category. Who uses Google Plus? That’s pretty much dead. If you’re sort of Google or somebody else who’s trying to get your growth reinvigorated, Twitter is obviously somebody that you can look at…”
Facebook famously approached Twitter about an acquisition in its early days, but the talks fell apart over the price.
Twitter’s stock price tumbled last year due to mounting concerns over slowing user growth. In recent months, however, the stock has ticked back up as Twitter execs have accelerated the pace of new features and worked to highlight its massive reach beyond active users.
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