The publicity surrounding Twitter as a ground-breaking social media tool before its
IPO were justified and with good reason. Looking at things today, social media tools
have become so common both in usage and as marketing tools. From Facebook to
Instagram, Snapchat and Twitter, companies are spending billions of dollars annually
in these apps to reach their clientele. In addition, Twitter was a pioneer in its own
right bringing the world of microblogging to life; it had the users to back up its
reputation. Social media tools that do not manufacture traditional physical products
cannot easily be valued based on traditional financial models and statements. This is
because the products are simply different ranging from the way they target their
clientele to the way people perceive them as well. Just to give an example, in 2018,
internet personality Kylie Jenner posted on her Twitter account that she did not like
a new redesign by Snapchat and the company ended up losing $1.3 billion in
valuation. This was one person just airing their views and they had the power to
cause such a loss to a giant social media company.
Therefore, it a combination of traditional metrics as well as new metrics tailored for
internet companies for one to accurately determine their value. The valuation of
social media tools and successful internet companies turning a profit.