Twitter, Microsoft among companies eying TikTok: RPT

Yahoo Finance’s Emily McCormick joins The First Trade with Alexis Christoforous and Brian Sozzi to discuss the potential of Twitter combining with TikTok.

Video Transcript

ALEXIS CHRISTOFOROUS: All right, I want to switch gears here. And aside from earnings, the TikTok situation continues to roll on. And there were some reports over the weekend that Microsoft has some competition, when it comes to wanting to buy the US operations of TikTok. We heard that Twitter was in talks with the parent company of this Chinese video app. What else can you tell us?

EMILY MCCORMICK: Well, a number of reports over the weekend, including from "The Wall Street Journal," speculating that Twitter also held preliminary talks about potentially combining with TikTok, citing sources familiar with the deal. Now, this coming, of course, as Microsoft has already confirmed talks, both with TikTok and the Trump administration, about carrying out such a deal.

So important to note here that Twitter does not look to be, like, the most likely candidate to take up that company at this point, to big reasons for this. First of all, unclear how Twitter would actually be able to finance such a deal. If we think about Twitter's valuation, its market cap is less than $30 billion, versus the more than $1.5 trillion from Microsoft. Twitter also has a much smaller cash and short-term investment pile of $7.8 billion as of June 30. It's about seven times-- 17 times smaller than we have for Microsoft.

Now, of course, Microsoft did say on August 2 that it was pursuing a deal. CEO Satya Nadella had discussed the issue with President Donald Trump. And it looks like Microsoft is looking at negotiating for TikTok's operations in the US, Australia, Canada, and New Zealand. Alexis?

ALEXIS CHRISTOFOROUS: All right, Emily McCormick, thank you.