In a retreating market, social media and internet-related exchange traded funds stood out Friday after Twitter (NasdaqGS: TWTR) initiated talks with several large technology companies, seeking potential suitors for an acquisition.
Twitter has received expressions of interest from several technology companies and may receive a formal bid shortly, reports David Faber for CNBC.
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TWTR shares surged 19.1% Friday on the potential acquisition talks.
Meanwhile, the Global X Social Media Index ETF (NasdaqGM: SOCL), which includes a large 8.9% weight in TWTR, gained 1.3% on Friday.
Other tech-related ETFs with large Twitter exposure also strengthened or at least helped offset the broader market sell-off on the acquisition talks. The Sprott BUZZ Social Media Insights ETF (NYSEArca: BUZ), which analyzes social media data to single out bullish investment perceptions on certain brands or companies, including 3.0% in TWTR, was flat on Friday. The PowerShares NASDAQ Internet Portfolio (NasdaqGS: PNQI) was down 0.1% and First Trust Dow Jones Internet Index Fund (NYSEArca: FDN) was 0.2% lower; both funds target internet-related companies. including 2.6% and 2.4% in TWTR, respectively. The SPDR S&P Internet ETF (NYSEArca: XWEB), which holds 2.1% TWTR, was also flat.
Twitter was reportedly seeing interest from big names like Google (NasdaqGS: GOOGL), Salesforce (NYSE: CRM), Microsoft (NasdaqGS: MSFT) and Verizon (NYSE: VZ), according to TechCrunch.
“From a strategic standpoint, we think from it would be more beneficial for Alphabet as opposed to Salesforce,” Morningstar analyst Ali Mogharabi told Reuters, referring to multinational conglomerate and parent company of Google.
Morningstar believes Twitter shares can be sold for at least $22 per share. TWTR was trading at $22.3 at last check Friday.
The potential suitors are said to be interested in the data that Twitter generates, along with its place as a media company.
However, Twitter as a company has missed Wall Street’s sales expectations over the first two quarters of the year and has yet to produce a net profit after 11 quarters as a public company. The social media firm has accumulated a loss of almost $2.3 billion since inception.
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Global X Social Media Index ETF
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