BUFFALO, N.Y. (WBEN) "I've looked at the numbers, there is no way to justify that number. If you look at the value of Twitter, as a stand alone company, there is no way to justify 45 billion dollars," said Ed Hutton, Director of the Financial Markets Laboratory at Niagara University.
Hutton was a guest on WBEN Tuesday, reacting to the deal that will see the world's richest man, Elon Musk, takeover Twitter as a for-profit business.
Since its launch in 2006, Twitter has become one of the most popular social media platforms and currently has over 300 million users. It has never been good at making a profit.
Twitter's biggest problem, is that it's a free, ad-supported business, that is not attractive to advertisers because it doesn't have enough users.
Hutton says Musk's business model with his other properties may offer insight into what he intends to do with Twitter.
"Tesla right now is worth over a trillion dollars, and growing," said Hutton. "And Tesla is a company that doesn't spend any money at all on advertising. Everyone knows Tesla and everyone knows Elon Musk. They don't have to spend any money on advertising. A company the size of Tesla could easily be spending 5 or 10 billion dollars a year on advertising like Ford and General Motors and Volkswagen. But Musk must be thinking that because of the publicity that he generates, he really doesn't have to spend money to promote Tesla."
Hutton says Musk has an even bigger venture that's coming up. "It's called Starlink. It's an internet service that's based on putting almost 40-thousand satellites in orbit. Several thousand are up in orbit already, but when it's done there will be about 40 thousand satellites that will blanket the earth with high speed internet."
Hutton said maybe this is where Musk ultimately sees Twitter. It could be part of his open access plan involving Starlink and Twitter.
