Social media platforms are a place where we can go to express ourselves—we can post pictures on Facebook and Instagram, share our thoughts on Twitter (News - Alert), and make funny faces for our friends on Snapchat. It’s a lot of fun, but we often forget that social media platforms are businesses as well. That fact is becoming abundantly clear for Twitter, who has been having a rough time attracting new users, thus resulting in slumping stock prices. To get back on their feet, Twitter is reportedly seeking an acquisition deal that would value them at $30 billion. There are a few contenders already, and Disney is contemplating throwing its hat into the ring as well.
According to Bloomberg (News - Alert), The Walt Disney Company is working with a financial adviser to evaluate a possible bid for Twitter, Inc. They’re not the only ones interested, though; Salesforce.com (News - Alert) Inc. is also considering a bid, and is working with Bank of America on the process.
Twitter’s decision to be acquired is a result of their recent struggle to boost its user base. Other social media platforms like Facebook and Snapchat are consistently gaining in popularity, which ultimately means their cash flow is soaring. Twitter isn’t having this experience, making them fall behind significantly. Their revenue was only up 20 percent during the second quarter, which is the smallest percentage gain since going public. Meanwhile, in the same quarter they reported 313 million monthly active users, which was only a 3 percent increase. Needless to say, they’re having trouble competing, which is where a potential buyer comes in.
If Disney (News - Alert) makes a bid, it may be able to help Twitter turn things around by furthering its video-streaming media strategy. In fact, Twitter shares are already seeing a bit of a boost just because of Disney’s interest, rising as much as 2 percent.
Why would Disney want to get involved with social media, though? James Cakmak, an analyst at Monness Crespi Hardt & Co., provided some insight by saying, “It’s a video distribution play…What Disney has to think about is what is its place in a post cord-cutting world. They are investing in technology for distribution – and this would give them the platform to reach audiences around the world.”
This makes sense, as Disney’s largest business—cable TV—has been facing shrinking viewers thanks to online video services. Disney’s Chairman and CEO Bob Iger is known for making strategic decisions, which is why he has started to invest in technology-related media businesses, including Hulu (News - Alert), Vice and BAMTech. If things go according to plan, Iger will be adding Twitter to his list of acquisitions, and Twitter will be the happiest social media platform on Earth.