HubSpot Inc (NYSE: HUBS) lost more than 15% on Wednesday following a report that Alphabet Inc (NASDAQ: GOOGL) is no longer interested in buying the software firm.
A potential takeover would have been one of the largest in 2024.
HubSpot stock is now down some 30% versus its year-to-date high in April.
Why did Google abandon plans of acquiring HubSpot?
Alphabet Inc was reported interested in acquiring HubSpot in April.
But the two companies “did not reach a point of detailed discussions about due diligence”, as per sources that talked to Bloomberg on condition of anonymity today.
Neither Google nor HubSpot has commented on the Bloomberg report so far. Unlike HubSpot stock, shares of Alphabet Inc are comfortably in the green at writing.
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Why did Google want to buy HubSpot?
Bringing HubSpot under its umbrella could have meaningfully helped Alphabet Inc in terms of revenue growth.
Note that HUBS has grown faster than GOOGL in recent quarters. In Q1, the New York listed firm saw its revenue jump another 23% to $617.4 million. Alphabet, in comparison, increased its revenue by 15% only in the first quarter.
In fact, Google has failed to report over 20% growth since early 2022.
The significant drop in HubSpot share price today is coupled with an increase in trading volume. At the time of writing on Wednesday, more than 4 million shares of the software company have exchanged hands versus its average daily trading volume of 0.67 million only.
Could Amazon now attempt to acquire HubSpot?
In June, Betaville said others including the tech behemoth Amazon.com Inc was interested in taking over HubSpot as well. Whether they’ll push forward now that Google has withdrawn is yet to unfold.
If AMZN does indeed buy HubSpot, it will be able to better compete with others that serve small and midsize enterprises like Oracle, Salesforce, and even Microsoft.
But regulatory clearance will remain a concern if a titan proposes to buy HubSpot. The Federal Trade Commission has been strongly against big-ticket merger and acquisitions (M&A) of late. Amazon has already had to abandon plans of acquiring iRobot this year due to regulatory restrictions.
The news arrives about a month before HubSpot is scheduled to report its financial results for the second quarter. Consensus is for it to lose 44 cents a share versus $1.17 per share a year ago.
Wall Street currently has a consensus “overweight” rating on HubSpot stock. Analysts see upside in it to $672 on average that translates to about a 40% upside from here.
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