Microsoft Corp (Nasdaq: MSFT) has an exclusive negotiation with promoters of messaging platform Discord to acquire the latter for more than $10 billion.
Specifically, Phil Spencer, chief of Xbox, which Microsoft owns , is heading the negotiations for the likely acquisition deal with a focus on gaming. Notably, in the past, the chat software provider was in touch with other potential buyers such as Amazon and Epic Games, but a deal did not materialize.
In case a deal with Microsoft does not fruition, Discord intends to go public, as per a Bloomberg news report. The stock closed at $236.48, up to $4.14 or 1.78% from the previous close.
Discord is scouting for a suitable acquirer, as per unconfirmed news reports. Even though the firm is reportedly in discussion with Redmond, Washington-based Microsoft, Venture Beat has questioned the negotiation’s seriousness as similar attempts have fallen flat in the past.
Some reports argue that the company does not need to offer itself when its business grows at a good pace.
Discord has about 140 million monthly users. Nevertheless, it is yet to post profits. The software is offered primarily free. The company’s revenue stream depends on Nitro subscriptions that provide cutting-edge features such as higher resolution-based screen sharing, more significant upload restrictions, and additional sticker packs.
Discord, which is offered freely for PC and mobile, permits people to chat through voice, text, or video on a real-time basis. The platform initially became popular among gamers but later became an acclaimed social networking site for several communities such as TV series, anime, music, etc.
To join, users need a direct invitation or learn details of private servers on the platform from any other social media or friends. The social media platform offers both a Reddit-like discussion board and an internet calling facility.
Several firms regard Discord as an essential tool as it links gaming firms with their users and fans via audio and text messaging communities. Nevertheless, concerning the sale of the firm, it all boils down to Discord CEO Jason Citron.
The outbreak of the COVID-19 pandemic improved gaming enterprises’ outlook as people were confined to the home and reached out to video games for recreation during lockdowns.
Many gaming companies have started capitalizing on the changing life-style. The US-based gaming firm Roblox got itself listed directly (instead of IPO route) in the market earlier in March and had a good opening.
The news of talks over the acquisition of Discord is expected to keep the stock of Microsoft range-bound with a slight bullish bias.
The historical price chart indicates that the stock moves along the ascending trend line, as shown in the image below. The stock is also trading above its 50-day moving average, while the Chaikin money flow indicator has a positive reading. Therefore, we are anticipating the stock to remain in an uptrend in the days ahead.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
