Back to top

Will Twitter (TWTR) Benefit from SoundCloud Acquisition?

Read MoreHide Full Article

Per media reports,Twitter Inc (TWTR - Free Report) might gain from the sale of music service company SoundCloud. In Jun 2016, Twitter bought a stake in the company worth $70 million.

Currently, rumors of Spotify holding talks to acquire SoundCloud are doing the rounds. Spotify is one of the biggest on demand streaming services with over 100 million active subscribers and 30 million paid subscribers. With the presence of Apple Inc. (AAPL - Free Report) , Inc (AMZN - Free Report) and Pandora Media Inc (P - Free Report) , competition is heating up in the streaming service arena. Analysts observe that snapping up SoundCloud is a good move on part of Spotify as it will give it access to its vast library of 125 million songs.

The buyout of SoundCloud may also benefit Twitter. Reportedly, if SoundCloud is sold for more than its current $700 million valuation, then Twitter stands to benefit on account of its $70 million investment in the streaming company.

Recently, Twitter has been in the limelight given the variety of names springing up as its potential buyers. Twitter is quite different from other social media platforms. It is the go-to platform for news. One of the most important assets of the company is the vast amount of data it collects that can be leveraged by many like Alphabet, Salesforce as well as The Walt Disney Company.

Twitter has been working on improving its fortune but with practically no success. Stagnant user base, issues with profitability and declining brand advertising revenues are its major concerns. Trolling is another menace that Twitter is fighting hard to get rid off but to no avail. Its shares have tanked 10% in the past one year.

We have to add that steps like its focus on “live” and changes to its platform, though heading in the right direction, haven’t had a favorable impact on its financial performance yet. This isn’t a good sign because investors are losing patience. In fact, Twitter’s elusive turnaround has many questioning the standalone status of the company, which has resulted in numerous buyout rumors this year.

At present, Twitter is a Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand.Click to see them now>>

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:, Inc. (AMZN) - free report >>

Apple Inc. (AAPL) - free report >>

Pandora Media, Inc. (P) - free report >>

Twitter, Inc. (TWTR) - free report >>

More from Zacks Analyst Blog

You May Like