Social media messaging platform Twitter (NYSE: TWTR) sees roughly 500 million tweets from hundreds of millions of users — and bots — per day, but the company also sees billions of dollars go toward operating expenses, only becoming profitable for the first time in 2018 and experiencing a net loss in 2020 and 2021. The company has taken some hits over the years, most recently for declining ad revenue and smaller-than-expected user growth. But it is also facing significant changes that could remake the Twitter platform.
Read on to learn about Twitter’s finances and other facts investors should know.
|CEO Parag Agrawal’s Base Salary||$1 million|
|What Twitter Is Worth|
|Share Price, 52-Week Range||$31.30-$69.81|
|2021 Revenue||$5.077 billion|
|2021 Profit||-$221.410 million|
|GOBankingRates’ Evaluation of Twitter’s Net Worth||$13.316 billion|
Twitter’s Market Cap: $31.34 Billion
Investors use market capitalization, or market cap for short, to gauge a company’s worth, and the market cap is just all the company’s stock combined. Twitter’s market cap as of Aug. 3 is $31.34 billion.
Twitter’s Net Worth: $13.316 Billion
Market cap gives investors an idea of a company’s worth, but with a caveat: Market prices change day to day, which means a bad trading day could throw off the company’s valuation. The GOBankingRates Evaluation of a company’s net worth, however, considers factors like full-year profit and revenue. The resulting value is more conservative but based on concrete figures.
Based on Twitter’s revenue and profits from the last three years, Twitter is worth $13.316 billion.
Twitter’s Trouble Turning a Profit
Twitter went public in November 2013 and enjoyed a strong share price of $45 due to investor interest. The platform is a favorite medium for celebrities and politicians. Reporters and journalists frequently use screenshots of tweets in their stories. Users can even use their accounts to boost hashtag movements.
Despite Twitter’s apparent ubiquity — and, some would say, influence — the company lost money until 2018. Since then it has finished just one year, 2019, in the black and has lost money in two of the last four quarters.
Share prices have also been volatile over the last few years, in part due to the company’s performance but also as a result of other factors. Notably, the stock dipped sharply in January 2020 after Twitter banned former President Donald Trump from the platform. Trump’s account had been Twitter’s most popular. The stock price recovered quickly, but following a year-long rally, during which it reached an all-time-high closing price of $77.06, shares have struggled to regain momentum.
Overall, 2021 was a difficult year that saw an $809.5 million class-action settlement, in addition to pandemic-related challenges. But since late last year, the company has been under the leadership of a full-time CEO: Parag Agrawal, who replaced Jack Dorsey in November 2021. Those who questioned Dorsey’s leadership saw this as a positive move that could turn Twitter around.
Good To Know
In its second-quarter 2022 earnings release, Twitter reported earnings, revenue and user growth that missed analysts’ expectations, according to CNBC. Revenue and earnings misses were especially significant.
The ‘Musk Effect’ Strikes Twitter
Twitter has ongoing challenges, not the least of which is its battle with Elon Musk.
In April, the news broke that Musk had purchased a 9.2% stake in Twitter. The move sent Twitter stock soaring 25% in premarket trading, The New York Times reported. Shortly after, Musk made public his intention to buy Twitter, stating that privatizing the company would bring it to its full potential by removing constraints on free speech.
Musk and Twitter announced a purchase agreement on April 25 — only for Musk to put the deal on hold pending verification of Twitter’s claim that less than 5% of accounts are spam accounts. Twitter responded with a “fire hose” of data, including hundreds of millions of tweets per day posted on Twitter. Musk balked at the raw-data offer, and on July 8 — two weeks after the board approved the sale — pulled out of the deal. Twitter has sued Musk in an attempt to force him to go through with the sale.
By early May, Twitter stock had lost all of the gains it had made following the news of Musk’s 9.2% stake.
Twitter’s Performance in the Second Quarter of 2022
In its July 22 earnings release, Twitter attributed “uncertainty related to the pending acquisition of Twitter” and the macroenvironment surrounding the advertising industry as the reasons behind a 1% decrease in revenue in the second quarter of 2022. Although ad revenue was up slightly, subscription and other revenue fell 27% year over year. The earnings release also noted that the pending sale had cost Twitter about $33 million in the second quarter and contributed to a 31% year-over-year increase in expenses.
Average monetizable daily active usage, or mDAU — an important metric that shows how many users might be served ads or use subscriptions and other paid Twitter products — was up 16.6% compared to the second quarter of 2021, with U.S. mDAU up 14.7% and international mDAU up 17%. However, that overall figure, as well as earnings and revenue, fell well short of analysts’ expectations.
Given the pending acquisition, Twitter said in the earnings release that it would not “host an earnings conference call, issue a shareholder letter, or provide financial guidance in conjunction with our second quarter 2022 earnings release.”
Where Twitter goes from here depends on the outcome of the lawsuit against Musk. If Twitter wins and Musk is forced to complete the sale at his offer price of $54.20 per share, he’ll essentially buy out shareholders for a significant premium over the current share price, which is $41 as of Aug. 3, and take the company private. If Musk wins and the deal falls through, Twitter will continue on as a public company struggling to bolster ad revenue and mDAU in the face of serious economic challenges.
Former Twitter CEO Jack Dorsey co-founded Twitter in 2006 with Noah Glass, Biz Stone and Evan Williams. He sent out the world’s first tweet in March 2006, which read: “just setting up my twttr.” In 2008, he was fired for subpar leadership, but he returned as Twitter’s chief executive officer in 2015.
Twitter has been the target of criticism from investors over the company’s lack of profitability, leading some to suggest that his role as CEO of Square made it difficult for Dorsey to give Twitter the focus it needed to make it profitable. Dorsey stepped down as CEO on Nov. 29, 2021. His replacement, Parag Agrawal, first joined the company in 2011 and most recently served as chief technology officer.
Sean Dennison contributed to the reporting for this article.
Data is accurate as of Aug. 3, 2022, and is subject to change.
Methodology: The GOBankingRates Evaluation assesses a company’s net worth based on the company’s total assets, total liabilities, and revenue and net income from the last three years. Base value is established by subtracting total liabilities from total assets from the company’s last full fiscal year. Income value is established by taking the average of the revenue from the last three full fiscal years, plus 10 times the average of the net profits from the last three full fiscal years, and then calculating the average of those two figures. The final GOBankingRates Evaluation number is the sum of the base value and the income value.