Twitter Inc TWTR has been the source of dozens of takeover rumors, but news of CEO Jack Dorsey's latest purchase raises significant doubts of their veracity.
On Monday, Dorsey bought 63,007 company shares at $15.87 and an additional 362,991 on Tuesday at $16.53 — essentially revealing his knowledge that Twitter isn't positioned for M&A activity.
From a legal standpoint, Dorsey couldn't have bought a stake if he was aware of an impending deal. Any insight into M&A prospects would have implicated him for insider trading.
Dorsey’s investment ultimately implies that — apart from an unexpected, hostile takeover — no deal will take place for at least a couple of quarters.
Related Link: What Twitter Has To Do To Survive
Corporate buyouts take months to actualize after talks are initiated, so even if management were to entertain bids immediately following Dorsey’s filing, Twitter would likely not be taken over for quite some time.
Twitter shares fell more than 2 percent from their intra-day peak as investors came to realize the implications of Dorsey’s investment.
The stock hit a pre-market high of $17.07 around 7:42 a.m. ET and, by 10:46 a.m., traded at $16.38.
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