Twitter Inc. (NYSE:TWTR) Banks a WinDate Published: 2016-09-28
Author: Ophir Gottlieb
Written by Ophir Gottlieb
The Financial Times has reported that Spotify is in "advanced talks" to purchase SoundCloud, and that could mean a nice win for Twitter Inc. (NYSE:TWTR).
Alex Heith of Business Insider tipped us off to this story. Twitter Inc. (NYSE:TWTR) made a $70 million investment in SoundCloud for what, at the time, was a 10% stake in the music company. News has broken that SoundCloud may be acquired by Spotify. Here's a snippet from BI:
The immediate impact for Twitter Inc. would be pretty simple -- a cash in flux to the bank. Should the SoundCloud sale go through for cash, Twitter Inc. (NYSE:TWTR) will get its $70 million back and whatever gains it has made on the investment. While that does sound like good news, we have another take.
It's the secret in plain sight, but Twitter Inc. has a mountain of cash -- $3.6 billion (after debt, it has $2.1 billion in net cash). While more cash in sounds good, we are left to wonder what else Twitter Inc. is going to do with it.
Since the firm doesn't seem particularly interested in a high visibility (and likely costly) marketing campaign for the NFL, we don't really see a clear path for using the cash on hand, and it looks more is about to drop in.
With the rumor mill spinning at full throttle for a Twitter takeover, perhaps everyone, Twitter Inc. included, is just waiting to see what happens with that ordeal before plunging its cash hoard into good use. For now, Twitter Inc. (NYSE:TWTR) appears to be getting yet more of the thing it doesn’t really need more of.
The author is long shares of Twitter Inc. (NYSE:TWTR).
WHY THIS MATTERS
Our research sits side-by-side with Goldman Sachs, Morgan Stanley and the rest on professional terminals, but we are the anti-institution and break the information advantage the top .1% have. Each company in our 'Top Picks' is the single winner in an exploding thematic shift like artificial intelligence, virtual reality, genomics, mobile pay, the Internet of Things, drones, biotech and more. Our favorite Spotlight Top Pick is up over 105% this year alone, and another of our nine spotlights is up 90% in a matter of months.
We just added a new small cap biotech with wonderful potential. Join Us: Get the most advanced research delivered to your inbox along with access to visual tools and data that until now has only been made available to the top 0.1%. Check it Out: Get the most advanced premium research delivered to your inbox along with access to visual tools and data that until now has only been made available to the top 1%.