Rarely do my predictions come true but this time I might be on the right track! On May 2nd I suggested Twitter was overstating its value because of its bot problem – an issue that Elon Musk says is a material breach of his purchase agreement with the social media company.
Musk did them a favor by releasing this in a Friday night post-market news dump. This is going to gut their stock price on Monday as it raises serious doubts about the actual number of real, non-bot active users are on the platform. This was an issue I also covered in the May 2 video, where Twitter was forced to disclose that they overcounted actual users by about 1 million due to a software issue.
They really have no way to measure bots on the platform. Why? Because Wall Street demanded user growth. There’s no way engineers would implement any impediment to that growth – it’s engrained in the code and the culture there.
Ultimately user growth is a poor measurement. Twitter’s value I think comes from the weighty influence of the “small” number of actual users it does have. As @davewiner pointed out a few months ago Twitter really is a big newsroom/cocktail party.
My new prediction is this deal is still going to close – but perhaps closer to $25-30 billion which is probably what the company is really worth.