We’ve seen some big-name mergers so far in 2017, and could see more in the coming year.
When looking for tech stocks that will be acquired in 2018, one should search for names that are in strong sectors that larger companies are looking to enter. The tech stocks that will be acquired will also have good products that are in strong demand and have great growth potential, as well as an affordable price tag.
Although my method for predicting takeover targets is not based on any complex financial data or ingenious algorithms, I have had some success predicting takeovers in the past. Specifically, I wrote that DreamWorks, Whole Foods and Whitewave could all be acquired before they were ultimately bought.
Based on my criteria, here are seven tech stocks that will be acquired in 2018.
Tech Stocks That Will Be Acquired in 2018: Snap (SNAP)
As I noted in a previous column, “the company’s flagship website, Snap Inc (NYSE:SNAP), has overtaken Facebook Inc (NASDAQ:FB) among both 12-17-year-olds and 18-to-24-year-olds in the U.S.,” research firm eMarketer reported.
Although Snap’s third-quarter financial results and user growth came in below expectations, its daily active user base is still growing, reaching a very impressive 178 million as of the end of the third quarter. Imagine what Snapchat could do if it had many more marketing dollars behind it and if its website was taken international.
Companies like Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL), Amazon.com, Inc. (NASDAQ:AMZN) and even eBay Inc (NASDAQ:EBAY) should be salivating at the prospect of obtaining the troves of user data and free advertising potential that Snapchat could provide.
Other, more dark-horse potential acquirers include Alibaba Group Holding Ltd (NYSE:BABA) (a great way to branch out to the U.S. ) Facebook (eliminate the strongest potential competitor in the U.S.) and beleaguered old media companies like Comcast Corporation (NASDAQ:CMCSA) and Walt Disney Co (NYSE:DIS) (Snapchat would provide a great means of breaking into the lucrative social media sector and promoting content among younger demographics.)
With Snap stock trading at a market cap of about $16 billion, it could probably be acquired for a bit north of $25 billion. That’s a bit pricey, but affordable for the potential acquirers I named.
Tech Stocks That Will Be Acquired in 2018: Weibo (WB)
As I’ve noted in the past, Weibo Corp (ADR) (NASDAQ:WB), one of China’s leading social networking sites, is extremely undervalued relative to its potential — compare its market cap to that of Facebook.
Moreover, the company should benefit from the rapid growth of the Chinese economy. Chinese e-commerce giant Alibaba, which already owns over 30% of Weibo stock, can greatly increase its traffic by advertising as much as it wants on the social network.
Finally, buying Weibo would enable Alibaba to bring its winning formula to many other countries, putting many more billions in Alibaba’s massive coffers.
Tech Stocks That Will Be Acquired in 2018: Voxeljet (VJET)
Source: MKzero Via Flickr
Other 3D printing companies have been acquired in the recent past, while HP Inc (NYSE:HPQ) recently entered the space, proving that, despite the sector’s troubles, major players still believe that it has a bright future. Meanwhile, Piper Jaffray analyst Troy Jensen said last month that Voxeljet reported “’solid’” third quarter results, with record gross margins and revenue up 43.4% sequentially, albeit slightly below Street expectations,” according to The Fly.
Also upbeat on Voxeljet was Zacks, which stated in September that the company’s new 3D printing system based on High Speed Sintering “has the potential to streamline supply chains and move production closer to markets, as it is typically 10 to 100 faster than present industrial 3D printing processes, as well as has the potential to produce up to 100,000 parts a day.”
Additionally, the technology “will enable Voxeljet to … directly manufacture end-use products,” Zacks believes. That sounds like technology that a company looking to enter the sector would want to have. And indicating that Voxeljet’s products are resonating in the market, the company’s revenue jumped to EUR7.4 million from EUR4.9 million during the same period a year earlier, while its loss narrowed to EUR26c from EUR94c.
Finally, with Voxeljet stock trading at a market cap of around $100 million, it can be acquired quite cheaply.
Tech Stocks That Will Be Acquired in 2018: ExOne (XONE)
Similarly, ExOne’s revenue jumped 22% last quarter to $15.9 million, and the company said it’s confident that its full-year revenue would rise 20%-25%. The company’s strong third quarter results and upbeat guidance led Canaccord analyst Bobby Burleson to upgrade the shares to buy from hold, The Fly reported. Writing that the company had “healthy” backlog and “strong” order flow last quarter, the analyst raised his price target on the shares to $13 from $9.50.
Finally, ExOne specializes in metal 3D printing which is “growing rapidly” and “is expected to be worth as much as $10 billion by 2030 to 2035,” according to McKinsey. ExOne stock has a market cap of around $200 million, making it very affordable for many potential acquirers.
Tech Stocks That Will Be Acquired in 2018: Advanced Micro Devices (AMD)
Source: Matthew Rutledge via Flickr
Up and coming tech name Advanced Micro Devices, Inc. (NASDAQ:AMD) appears poised to become a takeover target for companies looking to enter the growing cryptocurrency, gaming, semiconductor and artificial intelligence sectors. Since China is looking to become a bigger force in the semiconductor sector, one of its companies may look to buy AMD, while Intel, which recently entered into a partnership with AMD, could also buy its smaller competitor in order to increase its exposure to AI, gaming and cryptocurrency while eliminating a competitor.
After examining AMD’s intellectual property and “recent acquisitions of semiconductor companies with good intellectual property,” Jefferies analyst Mark Lipacis called AMD “undervalued,” according to The Fly. With a market cap of around $10 billion, AMD stock, after its recent pullback, is definitely affordable for Intel, other major companies In the semiconductor space, and large Chinese companies.
Tech Stocks That Will Be Acquired in 2018: CyberArk (CYBR)
In the wake of the WannaCry cyberattacks and, Equifax, Uber and Deloitte all disclosing massive cyberattacks this year, most companies and other enterprises will significantly increase their spending on cybersecurity in 2018. No CEO will want to share the fate of former Equifax CEO Richard Smith who was forced to resign in the wake of the attack on his company or former Uber CEO Travis Kalanick whose reputation was dragged further into the mud by the cyberattack on the transportation network.
Moreover, Europe is setting strict rules regarding cybersecurity for all of its companies and more countries will probably follow suit soon.So which companies will join Barracuda (which I touted in a May 2017 column) as tech takeover targets in 2018?
One good bet is Israeli IT security company CyberArk Software Ltd (NASDAQ:CYBR). According to the company, well-respected research firm Gartner says that several factors, including “the risk of breaches” and “the need to prevent, isolate and limit malware attacks that leverage privileged accounts” is driving interest in the privileged access management that CyberArk provides. Gartner quotes vendors as being pretty pleased with CyberArk’s solution, and the company delivered beat and raise third quarter results.
Trading at an affordable market cap of $1.6 billion, CyberArk could easily join LifeLock, Barracuda and McAfee in the ranks of security companies that have been snapped up by acquirers
Tech Stocks That Will Be Acquired in 2018: Proofpoint (PFPT)
Another cybersecurity company that looks poised to be acquired in 2018 is Proofpoint Inc (NASDAQ:PFPT), which specializes in e-mail security. In recent years, Deloitte, the British prime minister and Hillary Clinton’s campaign chairman, John Podesta, were all hacked through e-mail attacks. Since e-mail is an obvious target for hackers, Proofpoint should obtain its fair share of IT security spending, and Gartner has called Proofpoint a leader in the IT security space.
Proofpoint has been called a takeover target by Piper Jaffray’s Andrew Nowinski , according to The Fly, and the IT security company’s market cap of around $4 billion is much higher than some of the other potential targets I’ve mentioned, but still very affordable for large IT companies looking to enter the IT security sector.
As of this writing, Larry Ramer owned shares of Weibo.