6 Reasons Google Should Buy Twitter

Youssef Squali, an analyst at Cantor Fitzgerald, made the case that an acquisition of Twitter Inc (NYSE: TWTR) by Alphabet Inc (NASDAQ: GOOG) would be synergistic and willing to pay the highest price in any bidding war.

Squali offered six reasons to justify his thesis.

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• 1. An acquisition of Twitter would come with its first-party data on over 300 million users worldwide which could "enrich" Google's search engine's algorithm. The data would also improve relevancy and targetability within YouTube.
• 2. Twitter's real-time tweets are already integrated into Google's search results, but owning the company outright implies that the flow of the Tweets will continue and perhaps most importantly, Bing and Yahoo's (NASDAQ: YHOO) search engines won't have access to Twitter's data.
• 3. Facebook Inc (NASDAQ: FB) is "years ahead" of Alphabet in terms of messaging applications and owning Twitter will widen the gap and make Google more competitive over the longer-term.
• 4. Google would benefit the most out of any potential bidder in terms of realized cost synergies as it could eliminate a lot of Twitter's S&M and G&A expenses.
• 5. An acquisition of Twitter would automatically make Alphabet a "leading social platform" following its failure with Google+ several years ago.
• 6. Finally, Twitter's focus on live events could prove to be a boost to YouTube's own content strategy.

Bottom line, Alphabet is sitting on more than $70 billion in net cash with a "substantial portion" of it in the US. A deal would also be dilutive in the short term, but could prove to be accretive over the longer-term.

Squali rates shares of Alphabet with a Buy rating and $1,000 price target.