Twitter's Best End Game Is Still an Acquisition by Google

NEW YORK (TheStreet) -- Now that Dick Costolo is stepping down as Twitter (TWTR) CEO, the best option for the social networking giant remains becoming part of a larger entity, with Google (GOOG) (GOOGL) the most obvious buyer.

The majority of the $145 billion digital advertising money is still going to Google and increasingly to Facebook (FB), according to eMarketer. Google owned 31.4% of the market in 2014, while Facebook came in second, owning 7.9% of the market.

For Twitter to live up to its potential, as so many have discussed, it needs to spend inordinate amounts of money, a luxury the company doesn't have right now.

Twitter is not profitable on a GAAP basis and has never been, though it's profitable on a non-GAAP basis. Growth in monthly active users is slowing to a near crawl, with the company only adding 14 million in the previous quarter to end at 302 million. By contrast, Facebook ended the first quarter with 1.4 billion monthly active users.

Twitter is still in hyper growth mode, with first quarter revenue growing 74% year-over-year to $436 million. Most companies would kill for that kind of growth, but on a holistic scale, it's crumbs compared to the revenue Facebook or Google take in. By comparison, Facebook generated $3.54 billion in revenue, while Google's first quarter revenue was $13.91 billion, excluding traffic acquisition costs.

Google and Twitter have teamed up once again, integrating tweets into real-time search. Twitter advertisers can also use Google's DoubleClick to buy ads through DoubleClick Bid Manager and manage their ad campaigns from a centralized location.

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