As valuation falls, these companies may be acquired
Let's speculate today - who are the possible candidates for merger and acquisition during this market decline?
The most notable case would be Musk acquiring Twitter $Twitter (Delisted)(TWTR.US$ . Although the deal is on hold now, Twitter share price was halved from the high before Musk made the offer.
I believe it will go through as Twitter has been a great megaphone for Musk to build a cult and use it as an effective marketing channel for his Tesla cars. It is possible they could negotiate for a lower price given the poor market sentiment currently. Musk's complaint about fake accounts might just be an excuse for a discount.
Lately, crypto exchange FTX's CEO, Samuel Bankman-Fried, revealed a 7.6% stake in Robinhood $Robinhood(HOOD.US$ . The millennial's favourite trading app was only listed less than a year ago on 28 Jul 2021. The stock has already lost 90% from its peak market cap. Could this initial stake be a prelude to an offer?
This acquisition (if it happens) is within Bankman-Fried's competency as he could help Robinhood build out the crypto component. At the same time he could get the stock trading business that FTX didn't have. Most importantly he could get more users as FTX only has 1.2m users while Robinhood has 15.9m. It might be a worthwhile customer acquisition strategy.
Peloton $Peloton Interactive(PTON.US$ , the exercise bike with a subscription, has been long rumoured to be an acquisition target. Apple is the favourite because it has launched its Fitness+ subscription and has the most relevance for Peloton. But I take a different view - Apple prefers to build than to acquire and precisely they already have Fitness+ so why would they buy Peloton with duplicate features?
I think the more likely acquirer would be Alphabet. It acquired Fitbit and opened physical Google Store last year. The Pixel series handsets are getting good reviews and traction. Alphabet has showed better results with hardware than Amazon, Facebook and Microsoft (except Xbox). So buying Peloton can strengthen their direct-to-consumer hardware business.
Peloton's share price has dropped 91% from the peak.
Etsy $Etsy Inc(ETSY.US$ is an ecommerce platform focusing on selling handmade crafts. Its share price has tanked 72% from its high. Pinterest $Pinterest(PINS.US$ gives me the same feeling as Etsy, a social media platform focusing on archiving pretty images for creative ideas. Pinterest has been trying to get into ecommerce. So why not merge Etsy and Pinterest together to unleash the synergy?
Zoom $Zoom Video Communications(ZM.US$ is desperately in need of a new growth engine as its video conferencing SaaS business has already been dominant thanks to Covid. It failed to buy call centre SaaS, Five9. But I believe now is the time to try again with other SaaS companies considering their prices have fallen a lot.
If Zoom wants to stick to its communications core, it could consider RingCentral $RingCentral(RNG.US$ or Bandwidth $Bandwidth(BAND.US$ or Zendesk $Zendesk(ZEN.US$ . It can also consider productivity suites like Monday.com or Asana.
Talking about SaaS, Intuit $Intuit(INTU.US$ acquired email marketing platform, Mailchimp. It is expanding beyond accounting software (Quickbooks) and more targets could be acquired.
Hubspot $HubSpot(HUBS.US$ could provide the marketing and sales CRM (since they bought Mailchimp). Avalara $Avalara(AVLR.US$ has tax compliance solutions which is highly complementary to its accounting softwares. Workiva $Workiva(WK.US$ would be a similar target too. Coupa $Coupa Software(COUP.US$ can provide the expense management.
There should be some consolidation in the fintech space too. Lemonade is acquiring car insurer Metromile. Square bought Buy-Now-Pay-Later Afterpay. Visa, Mastercard, PayPal and Stripe have moolah to acquire. Smaller players like Affirm $Affirm Holdings(AFRM.US$ , Upstart $Upstart(UPST.US$ , Marqeta $Marqeta(MQ.US$ and Toast $Toast(TOST.US$ can be targets.
The list can go on but it is getting long. And let's not forget the Private Equity firms are waiting to pounce on great deals too - acquisitions may not just be from a business strategy perspective which was what I largely based on above. I believe the M&A scene will intensify soon.
The most notable case would be Musk acquiring Twitter $Twitter (Delisted)(TWTR.US$ . Although the deal is on hold now, Twitter share price was halved from the high before Musk made the offer.
I believe it will go through as Twitter has been a great megaphone for Musk to build a cult and use it as an effective marketing channel for his Tesla cars. It is possible they could negotiate for a lower price given the poor market sentiment currently. Musk's complaint about fake accounts might just be an excuse for a discount.
Lately, crypto exchange FTX's CEO, Samuel Bankman-Fried, revealed a 7.6% stake in Robinhood $Robinhood(HOOD.US$ . The millennial's favourite trading app was only listed less than a year ago on 28 Jul 2021. The stock has already lost 90% from its peak market cap. Could this initial stake be a prelude to an offer?
This acquisition (if it happens) is within Bankman-Fried's competency as he could help Robinhood build out the crypto component. At the same time he could get the stock trading business that FTX didn't have. Most importantly he could get more users as FTX only has 1.2m users while Robinhood has 15.9m. It might be a worthwhile customer acquisition strategy.
Peloton $Peloton Interactive(PTON.US$ , the exercise bike with a subscription, has been long rumoured to be an acquisition target. Apple is the favourite because it has launched its Fitness+ subscription and has the most relevance for Peloton. But I take a different view - Apple prefers to build than to acquire and precisely they already have Fitness+ so why would they buy Peloton with duplicate features?
I think the more likely acquirer would be Alphabet. It acquired Fitbit and opened physical Google Store last year. The Pixel series handsets are getting good reviews and traction. Alphabet has showed better results with hardware than Amazon, Facebook and Microsoft (except Xbox). So buying Peloton can strengthen their direct-to-consumer hardware business.
Peloton's share price has dropped 91% from the peak.
Etsy $Etsy Inc(ETSY.US$ is an ecommerce platform focusing on selling handmade crafts. Its share price has tanked 72% from its high. Pinterest $Pinterest(PINS.US$ gives me the same feeling as Etsy, a social media platform focusing on archiving pretty images for creative ideas. Pinterest has been trying to get into ecommerce. So why not merge Etsy and Pinterest together to unleash the synergy?
Zoom $Zoom Video Communications(ZM.US$ is desperately in need of a new growth engine as its video conferencing SaaS business has already been dominant thanks to Covid. It failed to buy call centre SaaS, Five9. But I believe now is the time to try again with other SaaS companies considering their prices have fallen a lot.
If Zoom wants to stick to its communications core, it could consider RingCentral $RingCentral(RNG.US$ or Bandwidth $Bandwidth(BAND.US$ or Zendesk $Zendesk(ZEN.US$ . It can also consider productivity suites like Monday.com or Asana.
Talking about SaaS, Intuit $Intuit(INTU.US$ acquired email marketing platform, Mailchimp. It is expanding beyond accounting software (Quickbooks) and more targets could be acquired.
Hubspot $HubSpot(HUBS.US$ could provide the marketing and sales CRM (since they bought Mailchimp). Avalara $Avalara(AVLR.US$ has tax compliance solutions which is highly complementary to its accounting softwares. Workiva $Workiva(WK.US$ would be a similar target too. Coupa $Coupa Software(COUP.US$ can provide the expense management.
There should be some consolidation in the fintech space too. Lemonade is acquiring car insurer Metromile. Square bought Buy-Now-Pay-Later Afterpay. Visa, Mastercard, PayPal and Stripe have moolah to acquire. Smaller players like Affirm $Affirm Holdings(AFRM.US$ , Upstart $Upstart(UPST.US$ , Marqeta $Marqeta(MQ.US$ and Toast $Toast(TOST.US$ can be targets.
The list can go on but it is getting long. And let's not forget the Private Equity firms are waiting to pounce on great deals too - acquisitions may not just be from a business strategy perspective which was what I largely based on above. I believe the M&A scene will intensify soon.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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Talklili : Let's all face reality. Musk could build Twitter for $5 billion. There is another agenda going on here that none of us are privy to.