Tesla boss Elon Musk has acquired almost a tenth of Twitter. Photo / AP
Opinion
OPINION:
Is Elon Musk trolling the world via a multibillion dollar investment to create a meme stock? Or is his investment in social media company Twitter a canny value play for a stock down nearly 40 per cent in the past year?
On Monday (US time), a filing revealed that
the Tesla boss had acquired almost a tenth of Twitter. The filing type he chose is for passive owners. Musk's own Twitter account is known for both its popularity and for landing him in regulatory hot water. So far, he has not tweeted about the investment.
Upon announcement of the stake, Twitter shares rocketed 26 per cent. There has been no shortage of drama at Twitter in recent years. Jack Dorsey, the mercurial company founder, ceded the chief executive job late last year. The company had settled with Elliott Management in 2020, a compromise that put the hedge fund on the board and brought in a US$1 billion ($1.4b) investment from Silver Lake Partners.
The hope was that together, these bright minds could jump-start Twitter's advertising business and revenue growth. In 2021, Twitter generated US$5b of revenue and had 217 million "monetisable" daily users. By 2023, the company promises that these will hit 315 million and US$7.5b, respectively. Wall Street is sceptical. Since the start of 2020, Twitter has traded at a median forward revenue multiple of 7.5 times. Rival Snapchat's valuation has been double that.
