What’s Going On With Twitter & Salesforce?



Twitter’s (NYSE: TWTR) stock gained more than 7 percent on Wednesday while Salesforce’s (NYSE: CRM) stock slumped lower by more than 4 percent.  The unusual pair trade isn’t that surprising considering the cloud CRM leader is rumored to be heavily interested in acquiring the ailing social media company.

The Wall Street Journal reported on Tuesday evening that Salesforce’s CEO Marc Benioff is pitching the idea of an acquisition to the company’s major shareholders.  In fact, the publication suggested that the executive even referred to Twitter as an “unpolished jewel” and he wants to make it a “great company” under his watch.

The Wall Street Journal further noted that under Salesforce’s umbrella, its clients could benefit from additional services across areas including sales, marketing and e-commerce.

There might be one problem standing in Benioff’s way.  His company is valued just north of $40 billion and Alphabet (NASDAQ: AAPL), Google’s parent company, is also considered to be a contender to buy Twitter.  

Google is valued at more than half a trillion dollars and it has more cash on hand than Salesforce’s entire valuation.  Add to the mix that Disney’s (NYSE: DIS) executives may be similarly interested in Twitter – and Benioff could easily be strong-armed by the Dow component.

Nevertheless, Salesforce’s investors appear to be in full panic mode and are dumping the stock under the assumption that Alphabet and Disney will ultimately pass on buying Twitter and Benioff is last man standing.

Salesforce’s stock has been under pressure before its name has been rumored to be interested in Twitter.  Including Wednesday’s decline, shares are lower by more than 13 percent since the start of 2016 and notably off its 52-week highs of $84.48.

Salesforce’s investors certainly can’t be blamed for not wanting any part of a deal with Twitter.  The company’s user base growth is extremely poor compared to its social media peers and various controversies involving online bullying, hate and harassment have caused investors to take a step back and watch the ship sink from the sidelines.

Twitter’s stock, despite Wednesday’s strong gains, is still lower by more than 11 percent over the past year.  In fact, the stock is still trading lower compared to the $26 it started trading at when it went public in November 2013.

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