Nearly one year after Jack Dorsey retook his position as CEO of Twitter, very little has changed at the tech company. Twitter still struggles to rope in new users. It still has a problem growing revenue. And it still has no clue how to handle the abuse that runs rampant on the service.
This is why, when the Twitter board of directors assemble on Thursday, they will discuss the possibility of selling the San Francisco company, according to a report this week by Recode. It could be months before Twitter decides to sell--Dorsey still hopes to carry out a vision of tapping into live broadcasts events as a way to reignite user growth--but the question remains: How much would an outside company be willing to pay for Twitter?
The starting point for any discussion of Twitter's price is its Wall Street valuation. The company currently carries a market cap a little north of $14 billion, down about 45 percent since Dorsey took over as interim CEO last June. But when it comes to acquisitions, the market cap rarely matches the final purchase price, and that appears to be the case when it comes to Twitter.
Analysts are all over the map when it comes to pricing the blue bird. For some, Twitter's potential remains so bright that they could see a buyer putting up dozens of billions of dollars to purchase it.
"I think $20 billion honestly would be significantly undervaluing the platform's potential," says Jason Moser, an analyst for Motley Fool, who believes Twitter serves a unique purpose in the tech industry and is a service that cannot easily be replaced. "It seems from our perspective that it's worth a lot more."
To others, Twitter is not worth even its market cap.
"You'd be foolish to buy it above $10 billion," says Jeff Reeves, analyst and executive editor at InvestorPlace.com. Reeves argues that prospective buyers would be wise to let Twitter's open-market value keep falling before bidding. "It's a company that continues to decline. I don't think the cavalry is coming."
To price Twitter, you have to first look at similar and recent deals. The obvious template here is Microsoft, which purchased LinkedIn for $26.2 billion in June. That sets the market value for the purchase of an upper-tier social network in 2016.
But while LinkedIn and Twitter are both social networks, there are some key differences. Chief among them are the communities found on each service. Though LinkedIn has just 106 million monthly users--a third of Twitter's user count--the company has a total user count of 450 million. Many of those users log in only when they are looking for a job or updating their profile after finding one, but they fill up LinkedIn with valuable professional data on a steady basis.
Twitter, on the other hand, has a hefty social network of 313 million users, but it is rife with problems. The user count has been at a plateau for years now. That likely means there is a steady carousel of millions of new users who cycle in just as millions more cycle out. "That's a really difficult sell," Reeves says.
Worse than stalled growth is the quality of Twitter's community. Although there are millions of users posting valuable content on the social network, there are also countless accounts that are spam, bots, or worse--trolls who harass others or terrorists who use the platform to spread their propaganda. These objectionable users are a result of Twitter's well-intentioned desire to allow total free speech and anonymity on the service, but they consistently drive out others, including influential users like actress Leslie Jones, who temporarily quit the service after a bombardment of racist tweets.
"It just feels like Twitter hasn't gotten good enough at systematically detecting, preventing and shutting down abuse," says Jan Dawson, chief analyst at Jackdaw Research. "It will put people off from wanting to use [Twitter] if it gets a reputation for that kind of thing."
Aside from stalled growth and a polluted community, Twitter suffers from a variety of other problems. Periscope, for example, is one of the company's most promising new technologies, but it faces a huge competitive threat in Facebook Live. Twitter has also fallen victim to a steady exodus of top executives over the past year. That is why to some, Twitter holds little value at the moment.
"I'd put them at $1 billion or $2 billion at best, considering their existing user base and the fact that they have a great brand," says Ilan Nass, founder of Taktical, a tech consulting firm. "Twitter is a famous name and that's probably the best thing they've got."
And yet, Twitter remains a unique service from which anyone with internet can broadcast what's happening to them or in their vicinity. It also remains filled with users who love the platform and use it on an active basis to share the stories they're reading and talk about the events they're watching.
"Twitter has become a megaphone for society," says Matthew Tuttle, CEO of Tuttle Tactical Management. "People love using it, and it is a quick and easy way to get your voice heard in an otherwise noisy world."
Some still consider Twitter the future of media. And when you look at Twitter from that perspective, the value of the company shoots right back up. Verizon or Comcast, for example, could consider the purchase of Twitter as a way to continue modernizing its media properties, says Johnny Won, founder of Hyperstop, a tech consulting firm.
"The thinking goes, if a larger media company could help figure out how Twitter enables higher ad rates with things like video and real live interactions, there is a price premium that could be paid," Won says.
For the likes of a Verizon or Comcast, buying Twitter provides an instant and massive new-media audience that allows an old-media company to go toe to toe with Facebook and Google, which have been steadily diverting advertising budgets. The mere interest from an old-media company could be enough to rout Facebook or Google into placing a blocking bid.
"Each side is motivated to increase its media power to counter the other one," Won says. "It's clear that [Twitter] is going to be a part of that future, but it's just not clear yet how."
Twitter still has enough cash in the bank to weather the next few quarters losing money and give Dorsey ample time to carry out a strategy. Shareholders remain patient for now, but with every quarter that passes without any glimmers of hope, that patience grows thin and the company's valuation keeps dropping.
"Every company eventually has to ask itself a serious question: What is my future?" says Amy Thomas, chief investment officer at AnalyzeWallStreet.com, a private investment and advisory firm. "Sometimes the answer is to join a larger company that allows them to scale and grow in a very big way."