On April 25, Elon Musk officially became the owner of the company by purchasing the entire Twitter. So, in how many years can Elon Musk amortize the $ 44 billion he paid for the sale and purchase with only Twitter revenues?
Elon Musk, the CEO of Tesla and SpaceX companies, the name of social media that does not fall off the agenda, finally detonated the expected bomb last night. The richest person in the world, who has been trying to buy the whole of Twitter since the beginning of April, succeeded in achieving his goal and bought Twitter for approximately 44 billion dollars.
The acquisition of one of the world’s largest social media platforms by Elon Musk, of course, brought different discussions all over the world. While issues such as Twitter’s role in the international arena, Elon Musk’s personality and its reflection on Twitter, and how Twitter will change continue to be discussed, we are also pursuing how long it will take Musk to make the money he paid to Twitter with only Twitter earnings.
How does Twitter make money? How much has he earned recently?
Before proceeding to the calculation, it is useful to briefly explain how Twitter makes money. Twitter adopts the same business model as Google and Facebook. Within the scope of this business model, all users can use the platform completely free of charge, while the income source of the platform is advertisements. Twitter’s ad revenue is not even close to Facebook and Google.
On the other hand, according to the earnings reports shared by Twitter, the company has managed to increase its income significantly every year. Twitter’s revenue and net profit in the last 10 years were as follows:
- 2012 – $0.3 billion ($188 million net profit)
- 2013 – $0.6 billion (net profit of $398 million)
- 2014 – $1.4 billion (net profit of $957 million)
- 2015 – $2.2 billion (net profit of $1.4 billion)
- 2016 – $2.5 billion (net profit of $1.59 billion)
- 2017 – $2.4 billion ($1.58 billion net profit)
- 2018 – $3 billion ($2.07 billion net profit)
- 2019 – $3.4 billion ($2.32 billion net profit)
- 2020 – $3.7 billion ($2.35 billion net profit)
- 2021 – $5.07 billion ($3.28 billion net profit)
Of course, it is very difficult to predict the annual profit rate of Twitter in the coming period, especially with Elon Musk taking over the company. Therefore, in order to make an estimation in this calculation, we will determine the average annual growth rate of Twitter’s annual revenue in the past period and take the last annual revenue announced by Twitter as a basis. In order to make the calculation more up-to-date, we will leave behind the huge rise of Twitter in its first years and consider the last 5 years (2017 – 2021).
- The average annual growth rate of Twitter’s revenues over the last 5 years: is approximately 20%
In order to calculate Elon Musk’s income from Twitter over profit, we will base the amount of profit announced by Twitter in 2021. Like this,
- If Twitter manages to increase its profits by 20% every year, its total profit in the 6th year will be $ 42.34 billion from 2022 profit. By the seventh year, the total profit will reach $54 billion, and the money paid to the company will be amortized and even pass into a profit of $ 10 billion.