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Microsoft (MSFT) +0.67% on news of potential $10bn deal for Discord
Microsoft (MSFT) shares closed 0.67% higher on the Nasdaq on Tuesday on reports that it could snap up gaming messaging app Discord in a deal worth more than $10bn.
Bloomberg said that Discord has started the process of talking to a number of potential buyers, with Microsoft among those eager to complete an acquisition, though it could also pursue an IPO by itself.
Amazon (AMZN), which completed a shrewd $980m deal for game streaming platform Twitch back in 2014, is also interested, as is developer Epic Games, the creator of Fortnite.
Microsoft’s recent focus on building a compelling subscription service in the gaming space means that it is on the lookout for new ways to expand.
Just last year, Microsoft tried to purchase the hugely popular social media app TikTok, and also reportedly approached Pinterest (PINS) about an acquisition.
Discord is viewed as another option due to its thriving community that uses the platform to coordinate online gaming sessions and talk via text, video and voice.
Discord launched six years ago and has steadily built a large, engaged monthly user base of 140 million people.
While the company delivered $130m in revenue in 2020, it has yet to post an annual profit.
However, CEO Jason Citron does not want to introduce an advertising model similar to social media sites such as Twitter (TWTR) and Facebook (FB), due to concerns about the user experience.
While Microsoft has spoken about buying Discord, Bloomberg stated that a deal is not close to being sealed just yet.
Microsoft shares climbed after the first bell on Tuesday and eventually finished 0.67% up at $237.58.
Analysts are currently very bullish on MSFT as the company has 29 buy ratings and not a single sell rating.
The average price target is $281.53.
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