Twitter Loses $5 Billion in Stock Valuation After Deplatforming Trump

"Trump, who had about 88 million followers, generated enormous publicity for the platform"

Twitter announced Friday night that it was ridding its platform of Donald Trump for good. This, of course, came after the president used his platform of choice to stir his followers to riot at the Capitol building last Wednesday.

Many cheered the move—including hundreds of Twitter employees—but the company’s stock woke up to a hangover on Monday, dropping as much as 12.3% in early trading and shedding about $5 billion of market value. The stock price recovered somewhat throughout the day Monday, losing 6.4% intraday. But the volatility may not be over.

Was Trump’s account really worth $5 billion to Twitter? And why did so many investors head for the exits? Analysts are suggesting three main possibilities.

1. FEAR OF SAGGING ENGAGEMENT

The near-term fear is that because Donald Trump is such a prominent figure on Twitter, the platform may see a large chunk of engagement disappear with him.

“The Trump Twitter ban may lead to fewer users, as one of the platform’s largest speakers is removed,” says Georgetown internet law professor Anupam Chander in an email. “Some users have already tried to migrate to Parler, for example, though that has proven to be a dead end.” (At least for now: Amazon Web Services, which hosted the right-wing social media site Parler, pulled the plug Sunday night.)

Not only did Trump tweet constantly, but his tweets were almost always some form of dog whistle to his base. They were often widely shared and frequently went viral. His tweets also reached beyond the platform as they were often discussed on TV news and on other websites.

One thing on Twitter investors’ minds right now is how the platform will continue to grow. Losing its 6th most popular account (with 88 million followers) is a step in the wrong direction.

Creative Strategies analyst Ben Bajarin adds that investors might just be registering the reality that Trump will soon no longer be president, and that Twitter’s engagement numbers may have gone down anyway.

2. FEAR OF AN EXODUS

The second reason for the stock drop is a bit more forward-looking. Right-wing and conservative users have long felt less at home on Twitter, which is run by a San Francisco-based tech company peopled mainly by liberals. It’s also true that politically, Donald Trump has become the center of the right’s world—the GOP has become the Party of Donald.

Bank of America equities analyst Justin Post wrote in a research note Monday that Twitter may experience some user “churn from the conservative community” in the current quarter. Over the past few months, some prominent conservative commentators announced that they were moving to Parler (though few actually deleted their Twitter accounts altogether). Still, that option may no longer be viable given the AWS ban.

Despite this trend, BofA still rates Twitter a “buy.” Post writes that “after some deactivation newsflow near-term, strong political activists will stay on Twitter for other content.”

“We think other Tweeters can replace Trump, and note since 11/17, Trump’s follower count is down by about 180k, and Biden’s is up by over 4 million,” he writes.

In addition, advertisers may not be as interested in reaching some of Trump’s most extreme Twitter followers. “The audience for speech condoning violence is pretty small—and in any case, whatever its size, that audience is not worth serving,” Professor Chander adds.

Right-wing users have threatened a walk-out many times before, but it’s never happened on a large scale because Trump has never been willing to abandon Twitter for some other, more right-friendly social platform. Now that Trump is gone, right-wingers may have less reason than ever to stick around.

3. FEAR OF REGULATION

Investors abhor regulated markets, and they get antsy when they catch a whiff of impending regulation in the air.

Whether Twitter was right or wrong to banish Trump, its move Friday was a display of power. When a single tech company is powerful enough to silence the main communication channel between the most powerful man in the world and his followers, regulators are apt to take notice.

It wasn’t alone—Facebook also suspended Trump’s account at least through the inauguration of Joe Biden on January 20 and it too suffered the consequences: Facebook stock sank 4.5% and erased $33.6 billion in market cap. Platforms companies displaying their willingness to shut down large media channels seems to have made investors nervous.

The big social networks themselves often say they want government to create a common set of rules that all players would use for content moderation. But their enthusiasm may depend on how much they get to help write the rules. Their investors can’t know what an eventual regulatory regime for social networks might look like, especially with the growing feeling in Washington that Big Tech has simply become too powerful.

And this applies not only to the U.S. but to other countries that might restrict Twitter’s business. Twitter hopes to achieve most of its future growth outside the U.S.

In addition, some of Twitter’s value may remain dependent on the continued challenges of alternative, right-wing social networks like Parler and Gab. Parler has now filed suit against Amazon, hoping to have its service restored. Gab has had its own share of problems—numerous hosting and internet service providers have abandoned it in the past because of content moderation issues. Its CEO Andrew Torbin says Gab now relies on its own home-build servers, and, lately, it’s been picking up new members at a clip of 600,000 to 700,000 per week.

In pre-market trading early Tuesday morning, Twitter’s stock had recovered slightly, up nearly 2% from the close on Monday.

Source: Fast Company



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glib1
glib1
9 days ago

I don’t think this is a problem at all for Twitter. Someone will print 6B and give it to Dorsey.

ken
ken
9 days ago

Never saw much in Twatter, F-book et all. Just millions of adolescents that haven’t grown up still acting like their in in a junior high school popularity contest. But it’s absolutely fantastic for government psyops and intelligence gathering. The IQ challenged idiots will believe anything,,, The holy rag for example or the need of a experimental vaccine for a alleged virus that has a 99.87% recovery rate.

Trump had 88 million followers. The word “followers” pretty much explains the problems being faced today.

Gerald
Gerald
8 days ago
Reply to  ken

Many of those followers will have been media news hounds and liberals waiting to be outraged every day when they get up. What are the poor darlings going to do for news now The Donald has been shut down. And outrage is quite addictive, all that adrenaline and overwrought ’emotionality’. Going to be a massive come down in Libtard County the next few months. Maybe the realisation that theyve given the keys to a warmongering corrupt soon to be Octogenarian with an administration thats beginning to look like the horsemen of the apocolypse will get their dander up again!

Sally Snyder
Sally Snyder
9 days ago

As shown in this article, Twitter is completely two-faced when it comes to censorship:

https://viableopposition.blogspot.com/2021/01/censorship-and-twitters-version-of-truth.html

If Twitter is an example of internet/Big Tech freedom of expression and a bastion of democracy, then we are all in big, big trouble

yuri
yuri
8 days ago

American self defeating stupidity on display; the sheep will remain on FB, twitter; vast numbers will find alternatives that censor less

Vonu
Vonu
8 days ago
Reply to  yuri

Maybe conservatives will find a cure for their cranial rectalitis and start their own social media outlets.

yuri
yuri
7 days ago
Reply to  Vonu

never have used FB to twitter–seems like seagulls gibbering. why they believe censorship is wonderful and admit this astonishes

Vonu
Vonu
8 days ago

The drop in the valuation could have been the result of the dumping of the stock before the deplatforming occurred, to avoid taking the loss.

Mr Reynard
Mr Reynard
8 days ago

I’m horrified, I’m outraged, I’m appalled, only 5 Billion $ in stock loss ?

Voz 0db
Voz 0db
8 days ago
Reply to  Mr Reynard

A small glitch!

With TRILLIONS being printed and given to the BANKS & Billionaires pretty soon that “loss” will turn into $10 Billion gain…

yuri
yuri
7 days ago
Reply to  Mr Reynard

this could create a migration to platforms that do not censor—GAB or Parler

BADGER BADGERISM
BADGER BADGERISM
7 days ago

boycott Twitter boycott Twitter boycott Twitter boycott Twitter boycott Twitter
boycott Facebook boycott Facebook boycott Facebook boycott Facebook boycott Facebook

Michael Levy
Michael Levy
7 days ago

Wow, that was a pretty scammy piece.
Same crapola pelosi is pitching.

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