Should Salesforce Acquire Twitter?

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Speculation is rampant about Twitter (NYSE:TWTR) potentially being acquired in the upcoming weeks, leading to the company’s stock rising over 20% in the last four trading days. Its prospective buyers currently include Salesforce (NYSE:CRM), Disney (NYSE:DIS) and Alphabet (NASDAQ:GOOG). News of Salesforce being interested in acquiring the social media platform did not go over particularly well with investors, resulting in the stock slipping 6% to about $70 on Friday. However, in this article we discuss how Twitter might be a good fit for Salesforce’s future growth plans.

Salesforce’s AI Future

Salesforce has previously estimated that the total addressable market for analytics will reach $82 billion by 2018. [1] Targeting this market, the company launched its Wave Analytics Cloud in 2014, which added the ability to analyze large data sets, something that was previously missing in the company’s offerings. In this year’s first quarter earnings call, Salesforce CEO Marc Benioff stated that artificial intelligence (AI) was going to be the industry’s key growth driver in the next decade. [2].

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In line with Benioff’s AI plans, Salesforce made numerous acquisitions in the fields of machine learning, business intelligence and deep learning in the last year including BeyondCore, PredictionIO, MetaMind and MinHash. Also, the company recently launched its artificial intelligence cloud – Salesforce Einstein, which is primarily aimed at delivering AI capabilities in the fields of sales, service and marketing. [3].

Where Does Twitter Fit In?

Twitter, which originally started out as a micro-blogging site, eventually evolved into a social platform for discussing views, news and live events. It is currently listed as a news app in both the App Store and Google Play Store, but video ads through streaming of live events are widely expected to be the primary source of revenue going forward. Twitter recently signed deals with several companies to live-stream events on its platform, including 120 Sports, Bloomberg TV and the four major sports leagues in the U.S. So what can a social media platform streaming live events provide Saleforce? Data.

1. Twitter’s Data

Currently, Twitter caters to majorly three user needs – micro-blogging site/social media platform, real-time news platform and live streaming platform. With its current monthly active user base of 313 million sending 500 million tweets a day and broadcasting millions of minutes of video every day, the user data available with Twitter is invaluable. This is likely what interests Salesforce.

Both companies have been working closely since 2012, when Twitter allowed Salesforce to access all public tweets for analytics and machine learning purposes. Salesforce utilizes social media data streams from Twitter – in addition to activity data from Chatter (Salesforce’s enterprise social network), email, calendar and e-commerce – in order to train predictive models in its AI offerings [3]. Complete ownership of the data would help Salesforce utilize the data in more ways to enhance its machine learning and artificial intelligence capabilities. On the other hand, the acquisition of Twitter by another company could result in Salesforce losing access to this data, which in the short term might prove detrimental to the development and evolution of Salesforce Einstein.

2. Network Of Professionals

In June, Salesforce lost out to Microsoft in acquiring LinkedIn. The acquisition of LinkedIn could have given Salesforce access to a large database of professional contacts. If acquired, Twitter could provide Salesforce with a similar data set of connected professionals and individuals, something that the latter was looking for in LinkedIn.

A recent study to explore the usage of Twitter for professional purposes concluded that Twitter served as an important online platform for professionals to connect and socialize with experts, leading to professional development. Another study rated Twitter higher than LinkedIn as a platform used by sales professionals for networking and business development. [4]. Also, with interactions between consumers and companies switching to social media, and real-time customer service via Twitter becoming the norm, Salesforce could utilize Twitter’s social media platform for improving its service and marketing cloud offerings.

It will be interesting to see how Twitter’s rumored sale turns out, considering there are other suitors as well. We will keep an eye on any developments.

Please refer to our complete analysis for Twitter and Salesforce

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Notes:
  1. Analyst Day, 2014 []
  2. Salesforce Earnings Call, Seeking Alpha, May 18th 2016 []
  3. Salesforce Introduces Salesforce Einstein, Investor Relations, September 19th 2016 [] []
  4. Is Twitter Really The Favorite Social Network For Sales Professionals, Forbes, July 7 2015 []