Seriously kudos to Elon Musk.
First of all, the $3 billion he spent on Twitter is actually a pretty small fraction of his net worth. And he recently sold a ton of Tesla shares. I am sure the tax bill was massive.
Nonetheless, he took some of his money and pushed the chips all in on the service he loves and uses daily. Musk does not use any other social network but Twitter. This network has largely helped create his entire brand. He has gone "viral" simply because of the way he uses Twitter. I call it a masterclass.
I would go so far to say that the network has even helped him get Tesla to where it is today. Remember all the short squeezes that happened on Twitter? All the debates? Tesla bears on Twitter? Buyout 420? The list goes on and on. Also, it's kind of an incredible cycle. He is already up $700 million on his investment – buys Twitter, everyone on Twitter tweets about, all the tweets spike the price, and now Twitter is pumping TWTR. Whoa.
I thought it was equally interesting that Twitter gave Musk a board seat after his stake. But this also makes perfect sense. Musk is a builder and considering how much he uses Twitter, he probably wants to fix a few things or push a few changes through.
Nonetheless, the chart above shows Twitter's stock price, PS ratio, and market cap. Is Twitter undervalued? Overvalued? It depends how far you think this platform can go in the future. Obviously they have lost to Facebook all these years, also TikTok, and even Snapchat. If Musk can actually spur some real growth, well, that might change how it's being valued.
First of all, the $3 billion he spent on Twitter is actually a pretty small fraction of his net worth. And he recently sold a ton of Tesla shares. I am sure the tax bill was massive.
Nonetheless, he took some of his money and pushed the chips all in on the service he loves and uses daily. Musk does not use any other social network but Twitter. This network has largely helped create his entire brand. He has gone "viral" simply because of the way he uses Twitter. I call it a masterclass.
I would go so far to say that the network has even helped him get Tesla to where it is today. Remember all the short squeezes that happened on Twitter? All the debates? Tesla bears on Twitter? Buyout 420? The list goes on and on. Also, it's kind of an incredible cycle. He is already up $700 million on his investment – buys Twitter, everyone on Twitter tweets about, all the tweets spike the price, and now Twitter is pumping TWTR. Whoa.
I thought it was equally interesting that Twitter gave Musk a board seat after his stake. But this also makes perfect sense. Musk is a builder and considering how much he uses Twitter, he probably wants to fix a few things or push a few changes through.
Nonetheless, the chart above shows Twitter's stock price, PS ratio, and market cap. Is Twitter undervalued? Overvalued? It depends how far you think this platform can go in the future. Obviously they have lost to Facebook all these years, also TikTok, and even Snapchat. If Musk can actually spur some real growth, well, that might change how it's being valued.
Comment:
Quick update: I am not too thrilled about the market cap rising because of the increasing share counts. They need to get that under control.
I work at TradingView helping to build charts, tools, and software for everyone interested in financial markets.
Twitter: twitter.com/scheplick
Blog: scheplick.com/
Twitter: twitter.com/scheplick
Blog: scheplick.com/