The past few weeks of revelations about Donald Trump should convince you of the utility of Twitter’s platform. It is the new news ticker, the way information gets spread at the speed of light by the fastest typists.
But that’s merely the networked and mobile technology. If you want to know how valuable the company is, you must ignore the utility of the social network and delve into the revenue numbers behind the platform. That exercise helps to explain why Twitter, which has put itself up for sale, hasn’t found a buyer yet.
Lots of theories have been floated about this issue, but the answer is simple: Twitter doesn’t have enough users, and each of the users it does have generate relatively little revenue compared with other social networks, as the table below shows:
Company Market value per user / Revenue per user
LinkedIn $243.85 $32.41
Facebook $216.33 $12.96
Angie’s List $170.64 $103.08
Twitter $45.11 $7.99
Yelp $19.25 $3.80
Source: USA Today
On top of it, Twitter’s user growth has stalled, as my Bloomberg View colleague Justin Fox wrote earlier this week. And it’s never turned a profit. Is it any wonder no one has been willing to pony up the $15 billion or so that some investors see as the selling price?
But I am more interested in the structural issues underlying the company. Twitter has multiple problems with its platform that must be solved in order restore growth. The big ones are increasing its user base and then making money off them.
Continues at Twitter’s Identity Crisis Gets in the Way of a Sale