Is Trump Responsible for Some of Twitter’s Valuation?



36 million Twitter followers

President Donald Trump may be frustrating some people with his divisive tweets, but without him, Twitter’s (TWTR) stock value would probably shrink substantially.

According to Bloomberg, citing analyst James Cakmak of Monness, Crespi, Hardt & Co., Twitter’s market value would drop by $2.0 billion if Trump stopped tweeting.

Trump joined Twitter in 2009, and his @realDonaldTrump account has attracted more than 36 million followers. The president has tweeted over 35,000 times since joining the platform.

More than 328 million people use Twitter at least once a month.

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Trump providing Twitter with free advertising

The chart above shows how Twitter’s MAU (monthly active users) have changed over the last five quarters.

Trump’s tweets have led to calls for Twitter to take down his account. Considering what Cakmak views as Trump’s contribution to Twitter’s valuation, it could be the reason the company is reluctant to delete the president’s account.

According to Cakmak, Trump may not necessarily be a source of monetizable posts for Twitter, but he provides the company with a powerful free advertising service—which Twitter needs in its highly competitive industry.

Struggle for growth

Twitter, which competes with Facebook (FB), Snap (SNAP), and Alphabet’s (GOOGL) Google in the online advertising space, is struggling to grow. As the chart above shows, the company’s monthly active user base was stagnant between 1Q17 and 2Q17.

Twitter’s top line also declined about 5% year-over-year in 2Q17, continuing a nearly 8% decline from the prior quarter.


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