Salesforce.com Relief Rally Rages As Twitter Stock Falls

Investors.com

Twitter (TWTR) stock fell again Monday as takeover talk died, and Salesforce.com's (CRM) "relief rally" continued on views it will not buy the struggling social media firm.

Apple (AAPL), Walt Disney (DIS), Google-parent Alphabet (GOOGL) and others have been ruled out as buyers of Twitter, at least until its valuation and asking price become more appetizing.

Twitter stock was down 14% in early trading in the stock market today, hitting a two-month low just above 17. Shares had jumped 21% on Sept. 23 when reports of Salesforce.com's interest surfaced. Salesforce.com stock, meanwhile, was up 5.5% early Monday, hitting a one-month high above 75.

Marc Benioff, Salesforce.com's CEO, cooled speculation during the company's Dreamforce customer conference last week about any pending offer for Twitter.

Citigroup's Walter Pritchard is among analysts who say Salesforce.com might renew its interest at the right price. And Pritchard says Salesforce.com could make another sizable acquisition, even if it's not Twitter.

Steve Ashley, an analyst at RW Baird, said in a research note: "We believe Marc Benioff could not have been more clear during his (Dreamforce) Q&A session: Twitter called them, they did not call Twitter; they look at all deals that come across their desk; and they will only do deals that are in best interest of shareholders."

IBD'S TAKE: Even with the Twitter relief rally, Salesforce.com stock is well below its late May all-time high of 84.5. Facebook and some other top stocks have paused after recent breakouts. Learn more about top stocks from the IBD 50, a listing of top stocks.

Salesforce.com had dropped on worries of equity dilution if it issued new stock as part of a Twitter takeover.

Piper Jaffray's Alex Zukin says investors might refocus on Salesforce.com's fundamentals.

"We see the current share price as an attractive buying opportunity as fears of a potential Twitter acquisition subside, and core business trends strengthen," he said in a report. "We see a bounce-back quarter followed by a seasonally strong Q4 that typically results in strong fiscal second-half performance."

The company has been active in the M&A field. Salesforce.com last week acquired Krux for a reported $700 million. In August, it purchased business analytics platform BeyondCore. In July, Salesforce.com bought startup Quip for $582 million. And in June, Salesforce announced it was buying e-commerce platform Demandware for $3 billion.

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