Without Donald Trump, Twitter could lose almost a fifth of its value.
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That's the conclusion of Monness Crespi Hardt & Co. analyst James Cakmak, who said that the social media company would see as much as $US2 billion ($2.5 billion) in market value wiped out if @realDonaldTrump quit tweeting.
It's not that the president's defection would touch off a mass exodus, lowering the number of "monetisable" daily active users, Cakmak said in an interview. Instead, losing its most prominent user would hit Twitter's intangible value and lead to what's known as multiple compression.
"There is no better free advertising in the world than the president of the United States," said Cakmak, who has a neutral rating on Twitter shares.
While Twitter doesn't disclose the total number, Cakmak estimates daily users are around 125 million, about 30 per cent fewer than messaging app Snapchat. Twitter said in July that daily active users rose 12 per cent in the second quarter, compared with the same period in 2016.
Trump has 36 million followers and has tweeted more than 35,500 times since joining the social media service in 2009.
In the past 24 hours alone, he has sent out 12 tweets sharing his views on the debate about his controversial reaction to last weekend's violent white supremacist rally in Charlottesville, on the taking down of Confederate monuments, on US job numbers, political enemies and fake news.
The public is learning (even more so) how dishonest the Fake News is. They totally misrepresent what I say about hate, bigotry etc. Shame!??? Donald J. Trump (@realDonaldTrump) August 17, 2017
He also commented on the Barcelona terrorist attack that occured overnight, suggesting one way to deal with the perpetrators:
Study what General Pershing of the United States did to terrorists when caught. There was no more Radical Islamic Terror for 35 years!??? Donald J. Trump (@realDonaldTrump) August 17, 2017
But with all the free publicity from the world's most powerful man, Twitter has failed to make the most of it, James Cakmak reckons.
Twitter's business doesn't face much risk from "potential diminishing political relevancy," the analyst said in a note published on Thursday.
"What's most important is the execution of the right strategy, since at the present state we find Twitter not capitalising on the opportunity that's in front of them."
Twitter shares have fallen 14 per cent since Trump won the presidency in the November 8 election. The company's market cap is about $US11.7 billion, according to data compiled by Bloomberg.
Bloomberg with BusinessDay
