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Twitter stock sank 5.6% Monday to $29.27. That was the lowest closing price since its debut as a publicly traded company on Nov. 7, 2013, at $26 a share.
The slump put Twitter Inc.'s (NYSE: TWTR) market value below $20 billion, a level that makes it more appealing as a takeover target.
"Sometimes a dip in trading price of a stock can be a triggering event for deeper M&A discussions," Ted Hollifield, co-head of the venture and merger and acquisition practice at Alston & Bird LLP, told Bloomberg. "If you were to go down a list of large tech companies with big cash piles, many of those names would make a lot of sense to at least have casual engagement with Twitter now."
Twitter stock has been the subject of takeover rumors for a while.
Named as potential buyers are social networking rivals Google Inc. (Nasdaq: GOOG, GOOGL) and Facebook Inc. (Nasdaq: FB). Additional names thrown into the mix are tech giants Microsoft Corp. (Nasdaq: MSFT) and Cisco Systems Inc. (Nasdaq: CSCO).
But investors hoping for a Twitter takeover right now are likely to be disappointed.
Josef Schuster, whose research-driven financial services firm Ipox Shuster LLC holds TWTR stock, told Bloomberg the Twitter stock price has further to fall. He thinks it needs to fall as low as $17 before it becomes an attractive target.
The swoon in Twitter stock comes less than a week after the 140-character microblogging platform reported uninspiring Q2 2015 results.
The social media company posted Q2 earnings per share (EPS) of $0.07 on $502 million in revenue. Analysts were looking for EPS of $0.04 on revenue of $481 million. After a 4% initial jump in reaction to the numbers, the Twitter stock price collapsed.
Setting off the decline was Twitter's average monthly active users (MAUs) count. MAUs – a key measure of growth for Twitter – came in at 304 million for the quarter. That was 12% higher than a year earlier but only up slightly from 302 million in the previous quarter. The metric fell short of analysts' expectations of 310 million MAUs.
Interim CEO Jack Dorsey did little to inspire confidence among investors on the conference call.
"We do not expect to see sustained meaningful growth in [monthly active users] until we start to reach the mass market," Dorsey cautioned. "We expect that will take a considerable period of time."
The Twitter stock price ticked up 0.65% to $29.46 Tuesday morning amid new takeover chatter. Year to date, shares are off 17.79%.
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- Business Insider: What 16 Twitter Analysts Are Saying About the Depressing Outlook and Stock-Price Crash
- Bloomberg: Twitter's Drop to Lowest Since IPO May Lure Takeover Offers