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Why is Salesforce (CRM) Stock Tanking Today?

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While Salesforce CEO Marc Benioff appears to be very serious about acquiring the struggling social networking company, its investors do not seem to like the idea.

On Wednesday, shares of cloud computing giant Salesforce.com (CRM - Free Report) are tumbling, down around 6.5% in afternoon trading after reports tying it more closely to a sale bid for Twitter Inc. have surfaced.

According to the Wall Street Journal, who cite unnamed sources, Mr. Benioff believes Twitter to be an “unpolished jewel” and has a desire to make it a “great company.”

But this will be harder than it looks. Salesforce has been busy these past few months, spending over $4 billion on acquisitions, so a Twitter buyout could seriously hurt the company’s valuation. According to Business Insider, Mizuho analyst Abhey Lamba estimates that purchasing Twitter could “destroy $12-17 billion (20-25%) of [Salesforce’s] value, which could take 2-3 years to recapture if all goes well,” said in a research note.

Along with depleting up to a quarter of its valuation, Salesforce will have to deal with Twitter’s notoriously jumbled management team, potentially a situation that could cost the company even more money and further strain its growth.

Twitter investors, on the other hand, seem to be happy at the reports. TWTR stock is up around 7% in afternoon trading to $25.17 per share.

Salesforce isn’t the only company seemingly interested in buying Twitter. Media conglomerate Walt Disney Co. (DIS - Free Report) and tech stalwart Alphabet Inc.’s (GOOGL - Free Report) Google division have also reportedly shown interest in making a sales bid.

Check out the latest episode of the Zacks Friday Finish Line podcast to find out more about the possible acquisition of Twitter.

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