Is X’s $19 Billion Valuation Justified? A Comparison with Snap
News that X (formerly Twitter) is now valued internally at $19 billion has sparked a wave of snickering from critics of Musk and his recently renamed social network. Instead of discussing why X may have shed so much value since it was purchased, including the caveat that it was not worth the $44 billion Musk paid when he bought it, let’s do a bit of comparison this morning.
The Exchange Explores Startups, Markets, and Money
Read The Exchange every morning on TechCrunch+ or get The Exchange newsletter every Saturday to stay up-to-date with the latest news and analysis on startups, markets, and money.
Snap: A Similar Social Network with a Different Story
As of this morning, Snap’s market value is approximately $16 billion, which puts it at a more modest valuation compared to X. But what’s behind these numbers? Let’s take a closer look at Snap’s performance and compare it with X’s.
Revenue and Growth
Snap has reported revenue of $3.24 billion through Q3 2023, which is on track to clock over $4.5 billion this year. In contrast, X expects revenue of around $4 billion for the same period. Moreover, Snap is growing its top line again and has been reporting better audience metrics.
User Base and Engagement
Snap’s user base may be similar to X’s in terms of numbers, but the engagement levels are different. Snapchat+ reached 5 million subscribers in the third quarter, up from more than 4 million reported in Q2 2023. X Premium (formerly known as Twitter Blue) subscribers, on the other hand, are estimated to be in the six figures.
Profitability and Debt
X’s massive debt load of $13 billion is a significant concern, making it cash-flow negative earlier this year. Snap, too, has lots of debt, but its senior convertible notes amount to $3.75 billion, which is lower than X’s total debt.
A Comparison of the Two Companies
From a revenue and growth perspective, Snap looks like the better company. Its user base may be similar in numbers, but the engagement levels are higher. Moreover, Snap has more paid subscribers and a lower debt-to-equity ratio.
Why Does X Think It’s Worth $19 Billion?
It’s hard to understand why X thinks it’s worth $19 billion while the market is valuing Snap at a more modest $16 billion. The answer may lie in X’s unique features, such as its massive user base and the potential for revenue growth through new products.
Conclusion
The comparison between X and Snap highlights the challenges that X faces in terms of revenue, profitability, and debt. While X has a large user base, Snap’s engagement levels are higher, and its revenue growth is more impressive. From this perspective, it’s difficult to justify X’s $19 billion valuation.
Related Topics
- EC Consumer Applications
- EC Market Analysis
- EC News Analysis
- Snap
- Snap Earnings
- Social
- The Exchange
- Twitter Value
Alex Wilhelm, Senior Reporter at TechCrunch
Alex Wilhelm was a senior reporter for TechCrunch covering the markets, venture capital, and startups. He was also the founding host of TechCrunch’s Webby Award-winning podcast Equity.
Most Popular Articles on TechCrunch
- Apple may add an iPhone Air to its lineup
- Researchers open source Sky-T1, a ‘reasoning’ AI model that can be trained for less than $450
- I got soaked driving the Arc Sport electric boat
- Matt Mullenweg deactivates WordPress contributor accounts over alleged fork plans
- Nvidia’s AI empire: A look at its top startup investments
Newsletters from TechCrunch
- TechCrunch Daily News: Get the best of TechCrunch’s coverage every weekday and Sunday.
- TechCrunch AI: Stay up-to-date with the latest news in artificial intelligence.
- TechCrunch Space: Get the latest advances in aerospace delivered to your inbox every Monday.
Subscribe to TechCrunch
Stay ahead of the curve with the latest news and analysis on startups, markets, and money. Subscribe to The Exchange newsletter or get TechCrunch Daily News delivered to your inbox every weekday and Sunday.
