Raymond Tiah Division

Against an EBIT margin of 37%

twitter stock

Against an EBIT margin of 37% it offers investors an EBIT yield of 11.6%. None of the others meet the hurdle rate for an intelligent investor. It is worth pointing out here that although https://dotbig.com/ Pinterest only achieved $15 of EBIT, it did it with $33 of invested capital. Facebook generated a far better $37 of EBIT, but it needed $102 of invested capital to achieve it.

twitter stock

The look and feel was largely unchanged and an unevolved platform has hindered Twitter in its ability to grow and to better engage its user base. Following Twitter’s IPO in November of 2013, the first trade was a little over $45. Today, while I write this article, it trades for less than that ($38 to be precise).

Twitter Analyst Opinions

Twitter began trading as $TWTR on the New York Stock Exchange on November 7, 2013 at $26.00 per share. By the end of its first trading session DotBig price had rallied 73% to $44.90, bringing Twitter’s market value to near $31 billion — three times its $10.5 billion valuation in May of that year. So why is Musk now making so much noise after having his bid accepted? Well, the value of Tesla stock has collapsed between the acceptance of his Twitter bid and now and so the plan has hit a bump in the road. If he completes the deal now, it won’t be worth as much to him as it was a couple of months ago because his over inflated currency is a little less over inflated.

Twitter did repurchase $245 million of common stock in 2020, but issued almost double that in stock based compensation so arguably the buy back was simply used to mask the SBC abuse. So while Twitter shareholders have seen a negative capital return since the 2013 IPO, Jack Dorsey has gone from being a humble employee on a regular wage https://dotbig.com/markets/stocks/TWTR/ to becoming a billionaire. I hear you objecting that he invented Twitter and so deserves a payback. Others may be objecting that he has made some of his wealth from his other company Square. Well, in response to the first objection, Dorsey’s net worth was $2.2bn on the day of the Twitter IPO and that was his payback for his invention.

That makes no sense and confirms what I said earlier in my valuation when I suggested that a 30% to 40% multiple contraction is most likely for Twitter. Looking at it slightly differently, $7.5bn top line and a 25% profit margin gives $1.875bn earnings. Apply an earnings multiple of perhaps 12x (which implies an earnings yield of 8.5%) and we come out at $22.5bn market cap. Once on the service, Twitter provides users with an incentive to come back more frequently and to spend more time on the platform. This means connecting users to the content that they love, content that they cannot find elsewhere. Referring back to the fly-wheel mentioned earlier, this means making it easy for creators to produce engaging content and Twitter is enhancing its suite of tools for creators. That means that the users are not the customers but the commodity.

Twitter Calendar

Fourth, he is CEO at Block , and there is no way one person can properly manage two public tech companies. The problem was not so much with the business or indeed its subsequent performance, but with the share price. While Twitter is arguably under-priced today , it was vastly over-priced in 2013. Investors back at the IPO had no chance of making any kind of reasonable return in the short to medium term because a decade of future growth was already baked into the share price.

  • Twitter needs to dig itself out of this hole but the actions of Mr Dorsey only made it worse.
  • On April 2022 Elon Musk acquired 9.2% of Twitter for approximately $42.67 per share.
  • Navigation wasn’t easy and finding people with common interests to connect with was challenging.
  • That means there’s an underlying trend across companies that rely on advertising for revenue.
  • In those days, and of critical importance, SMS messages were limited to 140 characters and enabled one-to-one communication.
  • Facebook is generating more than three times the revenue per user.

Pinterest is the winner here and is very capital light requiring only $33 of capital to generate the same $100 of sales. Why would you pay $30bn for this business today when it is likely to be worth only $22.5bn in two years time (implying a valuation today of $19bn on an NPV basis at a discount rate of 8.5%). In 2018 and 2019, prior to its heavy growth DotBig investment today, EBITDA margins were over 20% but today they have been compressed to 10.4%. Now consider that Facebook has an EBITDA margin near 45% and you can imagine how much margin expansion is possible for Twitter. It should certainly be able to expand its margin to around 25% after the heavy investment in turning the business around is complete.

Twitter Wants To Force Musk To Buy It But Theres A Hitch

So in the eight and a half years since Twitter went public, its share price is down and early investors are very unhappy. This means that Twitter is going to have to marshal at least some time, effort, and resources on battling Musk not only in the courtroom but in the https://dotbig.com/ ever-critical court of public opinion. The company has always had shakier finances and more struggles with profitability than many other top tech titles, and this current brouhaha probably won’t help. It’s understandable that investors bailed from the stock on Monday.

Elon Musk Is Hitting peak Hubris With His High

Turning this on its head, for every $102 of invested capital at Pinterest it will generate $45 of EBIT. From this perspective, Pinterest is arguably the better business . Twitter currently has approximately https://corporatefinanceinstitute.com/resources/careers/companies/top-banks-in-the-usa/ a 5% market share in advertising from large brands but has less than 0.5% of the advertising market from Small and Medium sized Enterprises (). The latter is where it needs to focus its attention.

So, my theory is that Musk is playing for time in the hope that the Tesla share price recovers. So Musk would take Twitter private see through the Twitter https://dotbig.com/markets/stocks/TWTR/ turnaround and exit after a few years via another IPO. So he extracts $44bn of value from his Tesla stock without causing the share price to collapse.

Said differently, it is a tool that is used to create productive value. It is the electronic town-square where the intelligentsia congregate. It is the social media hub preferred by politicians, journalists, financiers, business people and other educated influential people. Facebook, Instagram, WhatsApp, twitter stock price today LinkedIn and other social media platforms focus on the user interacting with his or her existing network of friends, family or work place acquaintances. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Anthony Di Pizio has no position in any of the stocks mentioned.

It also feeds directly off the SME advertising push. Twitter uses algorithms to do all of the heavy lifting. For example, recently Twitter addressed this issue with a feature called Topics. In the past, if you wanted to learn more about your favourite football team then you needed DotBig to fish around Twitter to find people who were publishing information on your team. Today you simply click the Topic that you like, so the name of the football team, and the rest happens automatically. Not only that, but the platform now suggests Topics based on your activity.

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