3-minute read
What do you think Macaulay Culkin is up to these days?
What?
You know, Macaulay Culkin, the Home Alone kid. What do you think fills up his calendar nowadays?
Haven’t the foggiest. Probably competing with you for the most aimless-minded adult in America.
Well, I was reminded of him the other day when I saw this on Twitter:
3.1 million likes…?
It’s the 11th most liked tweet of all time.
Twitter is a strange beast. You can dwell in irrelevance for years and then, BOOM!, millions of people react to your statement, joke, emoji, etc.
Or how about market-moving tweets? Remember this:
I do remember this. Shockingly enough, Tesla stock fell 6% that day, losing billions in value. All over a bad April Fools’ joke.[1] Like I said, Twitter is a strange (and sometimes powerful) beast.
You pay attention to their stock at all? I’d imagine its returns are pretty strong knowing how often we hear about it.
Eh, returns have been decent. Its 3-year return is 10% compared to the S&P at 15.5% and the NASDAQ at 18%.[2]
What’s the issue? Don’t they claim to have over 200 million daily active users?
They do. But it’s the monetization of those users that is the problem. Consider this: Twitter’s annual revenue in 2021 was $5.08 billion. Instagram, for comparison’s sake, reportedly brought home more than that in a single quarter in 2021.
That’s surprising to me. Twitter is referenced in the media on a daily basis, yet its business results reflect none of that ubiquity. Are you surprised by that?
Yes and no. We have come to learn that cultural relevance does not guarantee business success or strong stock returns.
So Twitter isn’t unique in that respect?
Well, what’s your take on Budweiser?
In relation to Twitter? Or in general?
In general.
Think it tastes like an old catcher’s mitt. Why?
Well, you’re in the minority because the equivalent of nearly 3.5 billion 12 oz. Budweisers were shipped around the world in 2019.
What’s your point?
Budweiser is one of the most recognizable brands in the US and around the globe. It’s been a mainstay in American culture for decades. But here’s what their revenue has been over time:
1Not to mention some production issues at the time.
2Returns as of April 25, 2022.
Looks decent to me.
It’s by no means a catastrophe. But compare that to a company like Google:
You’re going to compare it to one of the best companies of the past 15 years…?
I know. In some ways it’s an unfair comparison. In other ways it’s what investors have come to expect over the last decade plus.
So I assume Budweiser’s stock returns haven’t been too stellar?
Anheuser-Busch, Budweiser’s parent company, has a 3-year return of -10%, a 5-year of -9%, and a 10-year of 2%. Here’s how it’s looked against the S&P over the trailing 5 years:
Like I said, tastes like an old catcher’s mitt.
Exactly.
With that said, could a company like Twitter evolve into something more than its current form? Is there untapped business potential?
Potentially. However, the consensus seems to be that options for innovation are limited. Certain ideas to increase revenue (e.g. subscriptions) have been tossed around but nothing groundbreaking.
It still seems weird to me knowing how much we hear about Twitter. But you can’t fight the numbers.
It’s possible the crowd is wrong and Twitter sees a surge in revenue growth. The tough truth of it is we’ll likely never know. We can than Elon for killing any sequel to this post.