What to make of this rumor that Facebook was about to acquire Twitter for $500M in stock?
1 - Facebook did not want to do this deal, if it did, it would not offer $500M of stock at a $15B valuation when everyone now pegs Facebook’s value at $5B most. After all, most media companies are at 33-50% off their year-ago prices. Facebook would be no different. Even at the time, MSFT never said “We think Facebook is worth $15B”, it was a deal to mark its territory and if those were Facebook’s rules of engagement, it was worth it to them.
2 - Facebook is wiser to launch something internally than to acquire Twitter and integrate it. I am no programmer, but I am not sure how well Ruby on Rails (which Twitter was built on) with Facebook’s platform. Maybe it is a perfect match, who cares, we’re talking $500M. Mind you, it’s in stock.
3 -If I were Twitter’s VCs, I would certainly not even entertain this deal. Neither Facebook nor Twitter are going to become liquid investments any time soon… but finding a “greater fool”to come around and pay something for Twitter to justify their recent $100M valuation is easier than finding anyone to make the Facebook investment turn to cash.
4 - If I were Facebook’s VC’s, I’d seriously get my head checked for thinking that giving up $500M in stock is smarter than investing $5M (at most) to build something internally. Come on people.
5 - I don’t buy this notion that “next year Twitter will have a revenue model” - Facebook said that two years ago. Then Beacon came and went. No comment.
6 -Social media as a business model or platform is dead. Those who disagree sound awfully similar to those who argued last year that the US economy was resilient and someone would come and pay $1 more for their condo. At some point, logic and common sense trickle back into the landscape no matter how much resistance there is.
7 - Ultimately, this says that Twitter is not a $500M company and Facebook is not a $15B company. Otherwise, the deal would have been made.
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