44 billion. More than double the 19 that Facebook paid out in 2014 to buy Whatsapp. Even more distance than the one billion paid two years earlier by Mark Zuckerberg’s company to insure Instagram. The one concluded by Elon Musk last Monday is therehighest acquisition transaction ever in the history of social networks. A fair figure, if you look at the market value: the social network was paid $ 54.2 per share, in line with its valuation, however, which has grown by almost a third since in early April Musk began his climb by buying the 9.2% of the shares and becoming the largest shareholder for a few days.
But beyond the market valuation, what many commentators don’t seem to agree on is whether Twitter is really worth that money. Whether, beyond its current valuation, its growth prospects deserve such a hefty outlay by the US entrepreneur, who has committed 22 billion of their personal assets (mainly Tesla shares) to complete the transaction.
Twitter’s latest growth plans
The company has ambitious plans. The board of directors, commenting on the results of 2021, positive even if lower than analysts’ expectations, announced an important growth plan, capable of touching the 315 million active users on the platform (today they are 217 million) e $ 7.5 billion in revenues by the end of 2023 (from 5.08 in the last calendar year). Many interpreted those statements as a real recovery plan after difficult years, with accounts often in the red and a business model that was still struggling to find its way to profitability.
Twitter is a multi-billion dollar company, but it has always been one step behind the other big tech companies: it’s a big tech company, but on a very small scale compared to the others.
Social network
Elon Musk bought Twitter. What happens now?
by Pier Luigi Pisa
The business model: a comparison with Google and Facebook
It has the same business model as Google and Facebook: advertiser advertising. But its referral algorithms (and in some ways its very ‘nature’) offer fewer opportunities for companies to reach large numbers of potential customers.
If Google in 2021 recorded revenues of 257 billion dollars and Facebook 117 billion, Twitter recorded 5. Google is worth $ 1.7 trillionFacebook 583 billion and Twitter was worth 36 until Musk with his climb made them rise to 44.
For some quarterly, Twitter has begun to reward the efforts of investors, who for years have supported a company in the red. In the last three months of 2021, the social network recorded a profit of 181.7 million. But the comparison with other large technology companies remains very penalizing for the company founded in 2006 by Jack Dorsey.
In the same period, Google recorded profits of 16.2 billion, Facebook of 9.2 billion.
Deepening
What is happening on social networks in Italy
by Jaime D’Alessandro
How much were the other social networks worth, before being acquired
The comparison with the large acquisitions of social networks made so far is also interesting.
The last in chronological order is that of Saleforce which in 2020, in full lockdown and coronavirus smartworking, bought Slack for 28 billion. In 2021, the platform used to organize remote work generated a turnover of about 800 million dollars (Statista data), one sixth of Twitter.
Turnover similar to the 861 million recorded by Linkedin in the year in which Microsoft acquired it for 26 billion. It was 2016.
If we go even further back in time, we see that Microsoft I bought Skype in 2011 for 8.5 billion when the Swedish company invoiced 859 million a year. And in 2006 Google I bought Youtube for 1.6 billion when the video streaming service invoiced ‘just’ 15 million.
Out of the charts Instagram, which had just begun to grind its first profits when Zuckerberg secured it for $ 1 billion. She was just 12 months old. Today it is worth 100 billion.
Something that is perhaps worth more than 44 billion. Who uses Twitter
The numbers suggest that Musk has paid a fair price, but for a social network with an uncertain future, perhaps much more than that of the former startups that have entered the crosshairs of big techs. But Tesla’s boss already knew that he was, and he said he had put it into account. He has not lost opportunities, even in recent times, even after having bought a slice of the social network, to criticize the model and the ability to imagine himself in the future.
“I want to unleash its true potential, at the moment it is still largely unexpressed”, the entrepreneur wrote to the American Security Exchange Commission when he formalized his offer. But Musk also said he didn’t buy the social media to make a money machine. What interests him is his political standing.
Twitter is the most popular place for heads of state, politicians, commentators. They are the real ‘influencers’ of the platform. Being in control of an average company with the ability to see thoughts, opinions, sometimes political decisions take shape is worth a fortune. Perhaps more than 44 billion.