Salesforce: in exchange for ~50% of market cap would be adding $2B of Twitter revenue growing at ~5% to their $6B of revenue growing at 25%+
Disney: for 16% of their market cap Twitter's revenue is half of what Disney's top-line has been growing each year - and again not much growth
Can't see a case where either would unlock user or revenue growth
Not sure what is next for Twitter, but it looks like another year of plodding along trying different things.
With Goog and maybe Disney bowing out maybe other parties are waiting for a firesale to pick them up.
Twitter is just an overgrown, overfunded startup without an obvious path to revenue strong enough to support its operations and growth.
Scaling up a weak business to epic heights doesn't magically make it a success for shareholders. Initial investors, sure.
Generally, people like their businesses to reliably turn $1 into $2 over time, not turn $2.50 into $2 over and over.
Particularly if what you do with the other $0.50 is build something that's only valuable because of the group behavior of a few billion fickle users who will almost certainly desert you at some point in the future for something newer and shinier.
But nice work if you can get it in the meantime.
Generally, people like their businesses to reliably turn $1 into $2 over time, not turn $2.50 into $2 over and over.
If Twitter actually had a few billion users it would be pretty valuable. IIRC it has just a few hundred million.
Could you fire two thirds of all the staff and make it profitable?
It is best to look at market cap to determine value - Microsoft's 2008 offer was $44.6B; Yahoo's current market cap is $41.65B.
The discrepancy from then to now comes from the number of shares outstanding. There are fewer outstanding YHOO shares today than there were in 2008.
What % of that is their core business that MS offered to buy?
This is, afterall, the problem that sparked all the acquisition talks
According to the poster, the growth rate is 20% not 5%. Either way, to ball park acquisition price, you can divide growth rate by 10, add 1, then multiply in yearly revenue ((growth% / 10 + 1) * revenue). You can also divide growth rate by 10, double it, then multiply in yearly revenue ((growth% / 10 * 2) * revenue). Those estimates assume profit margins of 30%, so if you want to have it all be a multiple of profit, then divide the multiple by 0.3, then multiply that into yearly profit ((growth% / 10 + 1) / .3 * profit --or-- growth% / 10 * 2 / .3 * profit).
I just use (or avoid using) facebook for totally different reasons than I use twitter.
On twitter I mostly communicate with people I've never met and have little association with apart from shared interests. It's a great way of meeting new people.
Facebook is for communicating with people I already know, many of who are actively searching for alternatives but because "everybody uses it" are locked in.
I use Twitter. I enjoy Twitter. Twitter does many good things for the world. But it's terrible in a million ways. I'm not sure that it's immediate collapse wouldn't be a net benefit for society.
Let Twitter die. Turn into ash. Let something new have a chance to grow and flourish.
FYI Twitter's revenue has basically doubled every year the last 5 years.
This is wrong. No matter how much you down vote me, no matter how much you want that to be right, that number is wrong. Look it up yourself.
I don't know if these kinds of deals cost Twitter money directly (I wouldn't be surprised), but I'm sure their marketing department is the most expensive operation they have.
It wouldn't surprise me to hear some tech company has hired comedians to entertain the staff.
Where Facebook succeeded and Twitter failed was 1) building and growing a massive, highly engaged subscriber base, and then b) monetizing them.
The reality is, Twitter's DAU growth YoY has flat lined at around 300M while Facebook is nearly four times that and growing steadily.
Meanwhile, Twitter user engagement is somewhere around 3 minutes a day. Facebook? 10 times that.
The result: Twitter's ARPU is around $6. Facebook? Over double that, just north of $13 (both US numbers).
So while the media may love to mention them, my view is this is just a reality for the product. It's niche to begin with, and its focused on very small, bite-sized content that doesn't encourage prolonged engagement.
When I see Twitter ads for SaaS offerings or software tools, I actually read them. On FB, I'm very good at completely ignoring the ads.
For all the data that Facebook is said to collect, they actually don't have much on me besides friends I barely know, pictures of my child, some political rants and jokes liked.
Twitter on the other hand has a list of people with which I share interests and they can do targeting based on that list. Which is exactly what they are doing and for me it worked. I'm actually amazed that they aren't doing better on paper.
FB could easily double their ad content and still be usable. Is that true for twitter?
Seriously, what do you do for 1 hour per day?
And don't get me wrong, because I've seen some folks spending a lot of time on FB, I've got at least one family relative doing it, but those are the losers that are IMHO only worth targeting by soda and beer companies.
Twitter only failed at b); its user base should be enough to generate a nice profit.
In the real world, first, setting up and maintaining such a system would have substantial initial and operating costs (and possibly engagement costs, as it would complicate the UX), and, as opt-outs feom advertising would tend to be weighted toward the wealthier, more valuable (to advertisers), users, it would drop per advertising revenue per remaining advertising-supported user. So the buyout cost would have to be substantially more to break even.
Google is saying no to paying $18bn (just under $15bn in enterprise value) for that. I have a tough time valuing it north of $5 or 6bn EV, and that's assuming $500MM in earnings within 6 years (and break-even in fewer than 3).
I was in their office last year, talking to people who had nothing at all to do with the core product. There seemed to be all sorts of APIs and whatnot that they are trying to push, all of it marginal in relation to what most people think of Twitter.
One can view the Twitter business in multiple ways.
If one sees Twitter as a technology platform that builds on what IRC/XMPP did before, the Disney connection makes zero sense. (E.g. Disney is not a tech company and they wouldn't be the kind of company that would bring back a developer API.)
However, one can also see Twitter as a media entertainment business and the technology platform behind the scenes as an irrelevant detail. Disney does already own the ABC Broadcasting network and ESPN.
Looking at Twitter via the lense of "media outlet" isn't that strange if you look at the top-100 Twitter profiles:
One will notice it's mostly entertainment celebrities including singers Katy Perry (93M), Justin Bieber (88M), Taylor Swift (81M), etc. The list also includes media channels such as Youtube, CNN, ESPN, BBC, etc.
Sure, many people have touted the social ideals of Twitter and its empowerment of user-driven bottom-up journalism. It's a "global consciousness" for news. However, it's interesting to note the relatively low number of followers for famous journalists compared to the entertainment celebrities: Christiane Amanpour (1.8M), Louis Theroux (1.5M), Glenn Greenwald (743k), Malcolm Gladwell (422k), Bob Woodward (15.9k), etc.
If you see Twitter as a media/broadcast business, an acquisition by Google/Apple doesn't make any sense.
If you see Twitter as a technology platform to sell more digital ads, an acquisition by Disney makes no sense.
All that said, we've seen one media company (Rupert Murdoch) buy a web company (MySpace) and that didn't turn out so well for a variety of reasons.
When you buy the record label that Katy Perry has a deal with, you're buying it because Katy Perry has a deal in place to make N more records for that label.
When you buy Twitter because Katy Perry is on it, you're not getting anything. She could shut down her Twitter tomorrow and tell all her followers she's only on Instagram.
From the other side they can cheaply cross promote Twitter from all those media companies. Disney has long been about about merchandising not just entertainment, and they are a surprisingly innovative tech focused company.
Arguably, they could get most of this from the data feed for minimal outlay, but owning twitter let's them develop the kind of tools useful for themselves. So, think faster AB testing for commercials not just cash. Much like how Pixar does a lot of software development even though they make money from movies.
There is increasing crossover with Star Wars, and Pixar. However, they both started off independent so have strong brand identity on their own.
PS: The only really unifying concept with Disney is entertainment and abusing IP laws to squeeze ever more money from ever blander content.
Same here. There are a few companies that I could see a good fit with Twitter, but definitely not Disney.
Facebook is an option as their mission is to connect everyone in the world, and Twitter still works via SMS for the billions of people using non-smart mobile devices.
Google wants a social media platform with significant reach (Google+ is still struggling), and I could see Twitter integrating well with some of its other sites like Youtube.
Verizon has been able to squeeze money out of AOL, and currently plans to do the same with Yahoo. Maybe they could figure out a model for Twitter, but it seems like a bit of a stretch.
Apple dabbled in the social media sphere with Ping, and they have built-in authentication with Twitter. It seems unlikely they could ever make money off Twitter, but it seems like the sort of thing they might be willing to waste money on.
Twitter isn't a media company. They don't sell media, and in fact they don't sell enough of anything to make a profit.
ABC and ESPN (which Disney also owns) has studios and makes their own content; they're not merely distribution channels. Twitter, on the other hand, creates no content of its own.
They are different business models in the sense that Disney has a business model and Twitter doesn't.
> Twitter has tremendous value and with the right product changes, some rollbacks, I think it can become very powerful and in as much widespread use as Facebook, etc. The problem is is getting someone in the driver's seat who understands what Twitter's place (differentiation, offering) is and then getting that driving.
The problem isn't anything so vague. The problem is that Twitter hasn't ever made a profit and a this point probably won't ever make a profit. And I suspect that this refutes your assertion that "Twitter has tremendous value".
Surely, but what cyanbane said was that Disney is not this driver.
Yes, one prints money the other doesn't even know how and what to monetize
> Twitter has tremendous value
How do you define value?
So not only does that regulation not accomplish what it is supposed to accomplish, it actually causes the reverse.
The book Influence: The Psychology of Persuasion by Dr. Robert Cialdini covers this (and similar) phenomenons in detail. Huge eye opener.
> I personally ignore any research from people in stock positions.
I (and everyone, if asked) agree that's the rational thing to do. But most people don't behave that way in practice, unfortunately.
I don't have a good solution, the law benefits people like you and I who will act correctly on the information, but hurts people who are vulnerable—those who acts incorrectly on the information.
I was reading recently about the St Jude Medical incident where their stock was shorted by a company that produced a paper on security vulnerabilities in their products. This is currently going to court.
I wonder whether it's the same in all scenarios?
I don't know enough about Salesforce beyond a few of its products to imagine scenarios where Twitter has comparably low-friction integrations. Unless Disney makes a concerted effort to give Twitter autonomy...can't see how they could leverage it into something that's not just a loss-leader for entertainment. Maybe additional branding opportunities for ESPN and athletes, as well as another way to broadcast events?
edit: Any reason why Amazon isn't in the mix? Other than the obvious reason that they haven't made noise about it? Would an acquisition of Twitter's size be too unwieldy for Amazon?
Also, twitter's data was never truly public: you can follow tweets on some topics, but a proper deal with twitter is needed if you want access to the firehose (so it wasn't just under some pay-for-play API).
Too soon to make a verdict on Nest, but YT and DC seem to be the kind of acquisitions that Google paid a lot for, and from which Google advanced its bottom line and reach. FeedBurner ($100M), on the other hand...$100M is not nothing, but not as major as a Twitter acquisition would presumably be.
(AFAIK, Feedburner is still alive, but the APis have been deprecated a few years ago)
In any event, based on their current projected growth rate (27.51%), full year 2015 revenue ($2,218,032,000), and 2015 profit margin (25.15%) (which is likely BS, as they seem to be losing money), it seems they are worth about $8 or $12 billion.
One way to determine valuation is to divide growth rate by 10, add 1, then multiply in yearly revenue (27.51 / 10 + 1 = 3.751; 3.751 * $2,218,032,000 = $8,319,838,032). Or, as seems to be the trend recently, one could divide growth rate by 10, double it, then multiply in yearly revenue (27.51 / 10 * 2 = 5.502; 5.502 * $2,218,032,000 = $12,203,612,064).
These estimates usually assume 30% profit margin, so one can factor that out (as Twitter's seems to be ~25%) by applying the scaled multiple to "profit" (27.51 / 10 + 1 = 3.751; 3.751 / .3 = 12.5; 12.5 * $557,807,000 = $6,972,587,500) (27.51 / 10 * 2 = 5.502; 5.502 / .3 = 18.34; 18.34 * $557,807,000 = $10,230,180,380). One would then add in Twitter's estimated net assets (~$4.556 billion) to get a final estimated worth.
That is, Twitter is worth either $11.53 billion, or $14.79 billion (depending on how you look at it). As their market cap is $17.25 billion, and the media is suggesting offers are in the range of $25-30 billion, it's likely any acquirer will pay much much more than Twitter is worth, or all potential bidders will bow out, as Twitter's asking price is too high.
Also, no matter how you look at it, Twitter's employee count seems to be ~2x what it should be. So, either there'll be a large number of layoffs, or they'll have to stop hiring completely and "ride the wave" until their revenue/potential increases to be inline with their employee count.
Even just looking at what Twitter does, it's hard to see why 4,000 employees are needed. WTF are they doing? It's just another sign they are likely being thoroughly mismanaged. This is further supported by the abysmal senior management rating (3.2, versus a target of 4.0 or 4.2) they received on Glassdoor.
Confused me there for a second.
I guess there is the issue of WaPo being owned by Bezos directly though, not Amazon.
Just one example, trying to view an image on twitter: on the timeline images get cropped to some fixed aspect ration, if you click on them twitter will open its weird mediaviewer popup where the image is not cropped but it is resized to fit an even smaller rectangle. As far as I can tell the only way to see the image at its original resolution is to (1) click on it to open the mediaviewer pseudopopup, (2) right click on the image inside the mediaviewer pseudopopup, (3) select "copy image location", (4) select the URL bar, (5) paste the image URL.
And that's just one example that you would think is easy to fix but apparently isn't, there's many more (threading is shit, clickable areas are unnecessarily huge, sometimes keyboard arrows stop scrolling, there's no distinction between "talking about someone" and "talking to someone", two different "screen name" fields with one or the other being given prominence depending on context...)
I don't want to insult anyone or anything, but is Twitter frontend that impressive really?
Twitter's website currently is not Responsive. The web interface looks different on every platform (mobile, tablet, desktop). And on mobile, the website is terribly slow.
Right now it's hidden behind a magnifying glass.
I don't find the clickbaity trends they highlight on the homepage very interesting. The content is mostly the same as the MSN homepage.
Just let me search for things I find interesting.
Plus, search can be monitized way better, because you know for sure what the user is looking for.
Responsive or adaptive should be choice made at the start of projects and then ideally followed through till the end.
We choose responsive and made atomic components so it can work, but... it has to be in the thought process from design to implementation, the same can be said about adaptive.
Source: Our UI is complex, large, responsive and serves 3 million users and won awards.
Tomorrow is going to be an interesting day for TWTR.
It should be Google#.
2) The "app bubble" is a gross oversimplification. Uber is a world away from Twitter in product and profitability.
Where is the "plummet" on this 5d chart ?
Stock market opens at 9:30am.
If you want to short something like this, take a look at put options instead as your liability is explicit.
That depends. How confident are you that you have information, or a source of information, that has not been priced in by the market yet?
Twitter just has to be allowed to be Twitter and not some amalgamation that competes with Facebook in usage metrics when it's an entirely different experience. I know, whatever was on those slides promising the world to early investors are going to make for a hard pill to swallow, but Twitter is reasonably successful imo.
They're losing $500MM a year...
they should buy Twitter
1. give on on this acquisition thing for now
2. fire half your staff - what do all those people do?
3. you're a utility - charge for it. One penny per tweet would equal $2 Billion in annual revenue
4. after #3, there's no reason not to invite 3rd party developers back to the party
I think you're overlooking the fact that if they began charging to send tweets, volume would probably drop to less than 1% of what it is now. Even 1% is likely a generous estimation of the percentage of their userbase that considers sending tweets to be indispensable enough to pay for it.
As a bonus, charging a yearly fee would greatly reduce the need for moderation and pretty much solve the problem of "fake followers".
The problem of cause arises if it turns out that Twitter isn't actually providing most people any real value for the subscription.
I wish more sites would do this. IBM does it through the Weather Underground site and I subscribe.
Seeya. The biggest mistake Twitter could make is to "charge for it." They'll realize in a hurry that they're expendable entertainment.
There's also a really interesting monetization model of users rewarding each other for exceptional posts with virtual goods. Reddit gold seems to be a successful example of this model. Twitter is a public square just like reddit. They should try this model.
They hate it when it isn't exactly what they'd have written themselves.
I don't blame the mods for killing it, and nobody should jump to conclusions or accuse censorship. I think it's perfectly understandable.
1. Those organizations aren't there to "police" the community. Here are Twitter's actual words about what they're meant to do:
"The Twitter Trust and Safety Council provides input on our safety products, policies, and programs."
Notably not listed there: having any direct power over the Twitter community.
2. The reason why Twitter introduced this thing is that they were getting a lot of flack from people and groups who "lean to the left", for allegedly being a cesspool of the sort of abuse that people and groups who "lean to the left" get most upset about, and not doing anything about it.
I don't know whether those accusations were 100% wrong, 100% right, or somewhere in between. But when a company is attacked for doing or allowing something allegedly bad, it's hardly a surprise if the people it gets onside to try to show it's addressing the problem are the sort of people who most disapprove of whatever it was.
Last celeb to make a stink about moderation was Milo Yianniopoulos, who got booted for orchestrating a long campaign of harassment against the black woman from Ghostbusters because she was the black woman in Ghostbusters.
Somebody pointed to Scott Adams as an example of their left-wing moderation.
I used to be a fan of Scott Adams, and following him you can see him going further off the deep end, posting some sadly misogynistic stuff. I wouldn't be surprised if he crossed the line in some less-public ways.
We're talking about a middle-aged man who posts pictures of his abs to try to win arguments. He's losing it.
It's actually possible for independent people to all hate the new Ghostbusters film. It doesn't require orchestration to have taste.
Guilting people and sending out messaging like this is an attack on people's notion of self-determination and self-worth.
Perhaps you should unfollow those whose tweets you don't like. It isn't Twitter that is generating the content.
Is it the way they display it that bothers you?
Azealia Banks, black female rapped who endorsed Trump was banned. Search #FreeAzealiaBanks
Conservative Writer Kassy Dillon, who also endorsed Trump was temporarily banned. Search #FreeKassy
Cristina Laila, who's 'hate speech' was speaking out about Islam's unfair treatment of women, was suspended by Twitter.
Sabine Raymonvile, a black cop, who's 'hate speech' was speaking out that blue (police) lives matter, also suspended. Search #FeeeSabine
Chuck Johnson, free speech advocate and owner of https://www.wesearchr.com/. Search #FreeChuck
@instapundit was also suspended.
Is that enough yet? It's not hard to search twitter for people being pissed about prominent conservative bans.
Maybe it's not that Twitter is targeting Trump supporters, maybe it's that popular users who engage in hatefulness and/or harassment are more likely to be Trump supporters.
Fully agreed and totally expected for people to do this. But Twitter is going so far as to ban people who haven't made threats, but that Twitter considers evil.
EDIT: They're also shadowbanning many accounts of those who support Trump. Scott Adams recently switched his endorsement, and within a few days was shadowbanned.
Hacker News does the same, incidentally:
I always found that weird about the American system. "Free speech" on the one hand, and yet extreme reactions to political opinions everywhere. You regularly find Americans who publicly declare that they won't work with people with particular opinions. It switches which side is the one overtly silencing the other, which is also weird. When I was a teenager, it was definitely republicans silencing people, and yet today, not so much.
> I think it means the same thing as shadow banning. We have largely phased that out, except for spammers and serial trolls. For the most part we tell people that we banned them by posting a reply to one of their comments, and when they seem rehabilitable (I suppose that's not a word?) we invite them to email email@example.com if they want to be unbanned.
How about: they just have some BS department/AI that shadowbans based on user complaints etc, and they do a lousy job at it?
Here's the same result, without the conspiracy part.
His original "endorsement" of Hillary was driven by fear of being physically injured or killed due to his support of Trump. He's been pro-Trump from the beginning.
More accurately, that's the reason Scott Adams gives.
Twitter hasn't (as far as I know) responded yet.
Since Adams is known to use sock-puppets there might be something else going on.
Why would Twitter ban trump supporters and not all the other really vile people infesting twitter?
Because they work for the Clintons and Saudi Arabia.
Add to that the fact that 140 characters are not enough to put nuances and develop an argument, and you get an environment that fosters trolls. It's not limited to a specific way of thinking (i.e. SJW)
This is a direct consequence of the way twitter works with everything public, retweeting, etc.
And not just accounts are affected, entire hashtags are hidden from trending and auto complete as a means to limit their spread.
At the same time, other accounts who are truly harassing and even trying to incite violence are left alone, e.g. because the target is Trump or a Trump supporter and those are apparently fair game. (No, I am not a Trump supporter, but telling people to self harm or commit suicide because they tweeted #MAGA once is not only against twitter rules, it's against basic human decency)
Sure, they are a private company and entitled to censor or not censor as they please. But twitter users are also noticing that the self proclaimed free speech zone of the web and beacon of democracy fails to deliver on their free speech promises.
This is so distant from reality that screams partizan. I mean, as a notion, it's not even wrong.
Sure you can point to the idiotic extremes of "social justice" and feminism but it in my opinion the way it's used is really hurting the perception of the broader and more moderate causes which are really important. I can't help but feel the proponents of these slurs are mainly young white males who are apparently incapable of empathising with problems they can't identify with.
Social Justice and Feminism are both extremely important topics.