Why Is Talkspace (TALK) Stock Up 40% Today?
Talkspace (NASDAQ:TALK), an online therapy company based in New York, jumped over 40% overnight after a report that Amwell (NYSE:AMWL) might buy it.
The reported price is $1.50/share. TALK stock is due to open today at about 86 cents/share. That gives it a market capitalization of over $130 million. It closed Nov. 25 at 60 cents/share.
Talkspace, founded in 2012, came public in 2021 after a $1.4 billion SPAC deal, debuting at $8.90/share.
TALK Stock: Amwell to the Rescue
If the Amwell deal does come together it will represent a rescue. Talkspace was sent a notice of possible delisting last week, for failing to hold $1/share.
The situation grew dire on Nov. 8 after Talkspace reported a loss of almost $18 million on revenue of just $29.3 million for the quarter ending in September. Shortly after the results, Doug Braunstein, the interim CEO for a year, was replaced by Joel Cohen. This came a year after Braunstein replaced co-founders Oren and Roni Frank who were also let go after poor results.
Braunstein’s biggest failing was failing to follow up on acquisition offers. Firstime Ventures, an Israeli investment house that had put money into Talkspace, complained in September after Braunstein rejected an advance from Amwell. Amwell puts doctors online with patients through its software stack. In May, the company also rejected an approach from privately-held Mindpath.
Less than two weeks after Cohen came in, chief operating officer Mark Hirschhorn was shown the door after an internal review of his conduct.
CTech, an industry publication, charged that Talkspace represented “value destruction created by greed.” It said Amwell’s original offer was worth $450 million and Mindpath’s offer was similar. The current offer is worth just $200 million.
What Happens Now?
It’s likely that the Amwell deal will go through, as investors are demanding it, and those who resisted it have been let go.
The question now is whether that deal will close at the claimed price of $1.50, or whether the buyer might find a reason to offer less.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack.
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