Is Twitter Really Worth All That Money?

Is Twitter really worth the price Elon Musk will be paying to own it? The question is riddled with subtlety -- but as with anything in the world, value depends on perception.

In my eyes, Twitter is the modern evolution of the website and the chat room.  In the earlier days of the internet, you needed a website or a chat room to spread an idea.  You had to find a community that was willing to listen, and you pushed ideas, whether they were factual or not.  Twitter is the public example of that idea.   Twitter enables anyone to broadcast an idea or message and through hashtags, immediately uncover an audience who may be interested. 

Twitter lowers the barrier for entry in user-generated media, but it also sets a lower bar for truth and factual information.  If I wanted to post that the sky is falling or that Mars is about to release from its axis and crash into the moon, I could post that right now, and nobody would stop me from doing so. Neither statement would be factual, but I could reach an audience -- and given the sheer numbers on the platform, I would probably find someone to respond to the topic.



Twitter makes it easy to get your words into the media, and if you have a large enough following (like Musk does) then you become a media platform in and of yourself.  Twitter is a public relations vehicle.  Twitter is a way to circumvent the establishment, if you are able to corral enough of an audience.  Elon Musk has done so by pushing the envelope in technology and forcing the world to see him in a different light.  All that being said, is Twitter really worth all that money?

Tesla has a market cap of around $908 billion, which is down, but  still super valuable.  Tesla’s revenue was about $53 billion in 2021. 

The difference between its market cap and revenue is all about belief and perception.  Do you believe Tesla is going to grow?  Musk also owns SpaceX, The Boring Company, and some other odds and ends.  Each of these companies is valued by investors based on perception. 

The simplest answer I can provide is that Twitter is definitely worth all that money to Musk, because it enables him to prop up the perception of value in his companies.   He is the wealthiest person on the planet, and much of his wealth is based on perception.

Musk has Twitter because it will help him remain the wealthiest person on the planet, and maybe because he believes in free speech, too.  Just his act of buying Twitter has made Twitter more valuable, and he has been tweeting to tell us why its more valuable now that he owns it. 

Just think about that for a second.  He uses the platform to talk about the value of the platform, and as a result the platform is more valuable.  If you could do that, wouldn’t you?  So why shouldn’t he?

Musk buying Twitter means that he will be the wealthiest person on the planet for a long time.  He owns a significant platform from which to talk about his ideas, and maybe he will help Twitter to do the right thing in the world as well.  That remains to be seen. 

Twitter is now a media platform and has a responsibility to the public, whether Musk likes that or not.   Twitter has to be more than his megaphone for value creation.  Twitter is a source for news that gets covered by other news outlets, and as a result it has to take some responsibility for labeling or connoting the truth of what is placed on its platform.  Twitter is larger than many countries, and countries are held to the same standard, so maybe Twitter should be as well.

Whatever happens is going to be interesting to watch.  If someone asks you whether Twitter is worth all that money, just remember that beauty is in the eye of the beholder, and value is in the eye of the investor.  If that investor is the world’s richest man, and that value lies in his personal investments, you are darn well sure he understands that value and will do whatever he can to perpetuate it.

1 comment about "Is Twitter Really Worth All That Money?".
Check to receive email when comments are posted.
  1. Dane Claussen from Nonprofit Sector News, May 4, 2022 at 4:29 p.m.

    My god, what a lot of hot air.  Why not try to do an actual financial analysis of Twitter, you know, based on its actual (GAAP) revenues and its actual (GAAP) profits? Twitter is maybe worth $5 billion max. If Twitter is less of a trainwreck later than now, someone can pay more than $5 billion for it then. Paying $45 billion for it now is completely crazy. Twitter has been around since 2006 but so, far, only 330 million people in the entire world are using it. Its user growth is flat and projected to go down slightly. And Musk's ideas so far (charge user subscriptions, charge third-party re-use fees, drop advertising) would be suicide.
    I now return you to your regular fluffy programming.

Next story loading loading..