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Why Aswath Damodaran Thinks That Twitter Inc (TWTR) Is Not Worth $40 That It Is Currently Trading At?

Twitter Inc (NYSE:TWTR) is under the scanner after its disappointing third quarter earnings. Many analysts are pessimistic about its future, where as some other group still believe that Twitter has the needed qualities to be a big success. NYU Finance Professor Aswath Damodaran talked on CNBC about his take on the Twitter and its future.


After a disappointing third quarter earnings reported by Twitter Inc (NYSE:TWTR) many people blamed the management of Twitter. Many analysts believed that the Twitter Management is not focused on delivering better products and some other believe that the executives roles and responsibilities in Twitter are not well defined.

“When Twitter went public it was a company with a lot of potential in online advertising that hadn’t figured out a way to make money. After 5 earnings report I don’t see much that has changed,” Damodaran said.

Damodaran mentioned that he is not seeing Twitter Inc (NYSE:TWTR) evolving as a business or a company with each earnings report, but he feels that on the contrary Facebook Inc (NASDAQ:FB) has evolved as a company with every earnings report. He said that he is pessimistic about Twitter mainly because of this reason.

Damodaran added that the social media space is getting crowded every day and if a company like Twitter Inc (NYSE:TWTR) doesn’t figure out the best product and ways to make money the company is not worth even the low $40 that it is currently trading at.

Many people blame the business model of Twitter Inc (TWTR) and many other analysts’ blame the management for its downfall. Damodaran said that management is driving the business model and they need to get it right.

“I think the management has to come up with the business model. So when people complain about the management and I think that’s what they are saying. You have lots of users, you’ve got to figure out more creative ways which you can take advantage of those users and I don’t see that yet at Twitter,” Damodaran said.

Twitter Inc (NYSE:TWTR) is not holding the top spot in most used social media website though. Here’s the complete list of top 10 most used social media websites.

Disclosure: None

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