According to offshore hedge fund Laureate BVI, Google may acquire Twitter if the stock drops another 50 percent from the current level of US$32.44.
Beverly Hills, CA -- (SBWIRE) -- 06/02/2014 -- Laureate BVI advised investors on 05/09/2014 to close all short positions on Twitter (TWTR) after realizing a 54% return in 4 months.
Shares of Twitter (TWTR) have a 1-year low of US$29.51 and a 1-year high of US$74.73. The stock has a 50-day moving average of US$37.00 and a 200-day moving average of US$49.47. The company’s current market cap is US$19 billion.
Laureate Research noted Twitter short interest showing a significant drop during the month of May with short interest totaling 41 million shares versus 50 million shares the month prior.
Laureate BVI CEO Peter Tasca stated, “We see more trading risk in maintaining a bearish position in Twitter (TWTR) because this company could easily become an acquisition target for Google (GOOG).”
Laureate reports, Google (GOOG) could acquire Twitter (TWTR) in the US$12 – 14 billion market value. Google has over US$50 billion in cash and generates over US$2 billion in cash every quarter.
Tasca states, “Google tried to buy WhatsApp for US$10 billion but was outbid by Facebook (FB). Twitter (TWTR) is a powerful tool but its business model is not profitable. Twitter needs to partner with a larger company and the only suitor out there is Google.”
In a recent report from eMarketer, by 2018, 40% of Twitter’s users will be from the Asia-Pacific region reaching nearly 400 million users worldwide.
On Wednesday, Twitter signed a US$230 million deal for two years with Omnicom. Omnicom will integrate an automated ad buying platform with Twitter’s MoPub.
For the first time Facebook has ad impression revenue growth greater than Google. In 2013 Facebook had ad display revenue of US$3.28 billion versus Google’s US$3 billion, according to eMarketer.
Laureate reports, Facebook is emerging as a serious threat to Google’s core business and Twitter is the only social company Google can buy to fend off Facebook. Twitter’s advertisers cannot target users as well as Facebook because you can sign-up to Twitter with an email account and a fake name. Twitter knows very little about their users unlike Facebook.
Peter Tasca states, “If Google buys Twitter, this will give Google the opportunity to merge GTalk and create a strong competitor to Facebook’s WhatsApp. The time to do this is now, Facebook is in the process of slowly replacing Google, this could eventually lead to Google paying Facebook for distribution.”
About Laureate Trust
In 2013, Laureate Trust received the prestigious award in Finance by the US Institute for Excellence in Commerce. Last year this multiple platform strategy returned +23.01% net of all fees which has outperformed the Barron’s Top 100 Hedge Fund Average, Barclayhedge Fund Index Average and the S&P 500 Total Return Average.
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Laureate BVI is a private investment firm that specializes in the management of diversified portfolios. We publish information regarding companies we believe may be of interest to sophisticated investors. However, the information in our release is not intended to be personalized recommendations to buy, hold, or sell securities. Laureate BVI at any given time may hold long/short trading positions in equities, bonds, options, or cash to counter-balance and stabilize the portfolio. Therefore, readers will need to depend on their own mastery of the details of trading and investing in order to handle problematic situations that may arise, including the consultation of their own brokers or advisers as they deem appropriate.
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