Twitter stands to gain from Spotify buying SoundCloud

Jack Dorsey AP ImagesTwitter CEO Jack Dorsey

Spotify’s potential acquisition of music streaming service SoundCloud could benefit another struggling internet company: Twitter.

On Wednesday The Financial Times reported that Spotify is in “advanced talks” to acquire SoundCloud for an undisclosed sum.

An acquisition would presumably be good news for SoundCloud, which has struggled to gain traction with its paid streaming service. For Spotify, it would take one more competitor off the market and give the music giant access to SoundCloud’s large catalogue of 125 million songs.

So where does Twitter come in?

In June Twitter invested $70 million in SoundCloud, according to Recode. At the time, SoundCloud was reportedly valued at $700 million. That means that Twitter could stand to reap a nice windfall from the sale if it happens (assuming Soundcloud sells for more than $700 million).

For Twitter, which has struggled to grow its business and has seen its stock get crushed over the past year, a Soundcloud payout would be a rare piece of good news.

And it would represent one more ironic parallel between Twitter and Yahoo, another struggling company whose core business was hated by Wall Street investors but which benefited from an investment in Alibaba.

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