Ad
Ad
Ad
Consumer discretionary

Here’s Why Twitter Inc (NYSE:TWTR) Has Invested $70 Million in SoundCloud

Pinterest LinkedIn Tumblr

Back in 2014, Twitter was reportedly considering acquiring SoundCloud. However, it decided against that later

Twitter Inc. (NYSE:TWTR) is reportedly making its own play in the online music streaming business. According to a recent ReCode report, the social media company has invested $70 million in SoundCloud in a latest funding round for the streaming service. The funding round is said to go into the $100 million range as per unnamed sources quoted by the publication.

SoundCloud aims to hit a $700 million valuation through the funding round. Interestingly enough, back in 2014, investors had reportedly put forth the same number with regard to the company’s valuation when it raised around $60 million.

Twitter, in exchange for its investment in SoundCloud, would own a stake in the company. “Earlier this year we made an investment in SoundCloud through Twitter Ventures to help support some of our efforts with creators,” Twitter CEO Jack Dorsey said in an interview with ReCode. Mr. Dorsey went on to regard SoundCloud as one of its “great partners,” adding that both his company and the streaming service have a similar business model.

Meanwhile, SoundCloud, after confirming Twitter’s investment, highlighted that it will allow the company to better streamline its worldwide efforts and concentrate on creating more value for both artists and audiences in a better way. “This investment will enable SoundCloud to remain focused on building value for creators and listeners alike, and to continue the global rollout of many company initiatives such as our recently launched subscription service, SoundCloud Go,” the company said in a statement to ReCode.

At present, it is unknown whether Twitter’s investment reflects a partnership arrangement with SoundCloud wherein both platforms could integrate with each another. It should be noted though, that earlier on in 2014, Twitter was reportedly contemplating to completely buy out SoundCloud, however, it decided to pass on that opportunity.  

There is a strong possibility that with this investment, Twitter aims to improve its own platform in a bid to increase user engagement and subscription. The company’s user base has been stuck in a stalemate since quite a while, with the stock bearing the brunt of investor concerns on Twitter’s ability to turn around its business. In the past 12 months, the microblogging service has seen shares plunge nearly 60% while the S&P 500 has declined a meagre 0.9%.

The idea of Twitter itself being acquired by other major players in the tech industry has been greatly welcomed in business and investor circles. Since LinkedIn’s $26 billion acquisition by Microsoft, investors believe it is quite possible that Twitter might be acquired in a similar fashion. This is well reflected in the stock price, which, for the past two days, has surged by 10%. Many believe that like LinkedIn Corp. (NYSE:LNKD), Twitter may also be forced to sell itself amid increased brain drain in its workforce along with depressed stock levels.

Comments are closed.