CFA Society Taiwan

CPD - Business Valuation in the Era of Social Media

“Business Valuation in the Era of Social Media” According to Forbes, global social media users reached 4.9 billion by 2023, projected to reach 5.85 billion by 2027 with a compound annual growth rate of 26.2% (1) .  The social media industry has witnessed the remarkable emergence of several billion and trillion-dollar businesses. Meta, the parent company of Facebook, Instagram, Messenger, and WhatsApp, is valued at 1.21 trillion USD (as of May 10, 2024) and earns 131.948 billion USD annually through advertising (Meta annual report 2023). YouTube, owned by Google, generates 31.51 billion USD in annual ad revenues (2)   Social media has not only revolutionized how people socialize and conduct business but has also demonstrated tremendous potential for growth and profitability. In this seminar, Professor Kasper Meisner Nielsen will be using ”Twitter” as an example to discuss the valuation difficulties that arise when the traditional valuation techniques are difficult to apply to rapidly growing industries. In January 2022, Elon Musk began acquiring an equity stake in Twitter Inc., resulting in a surprise hostile takeover bid to purchase and delist the company in April 2022. The offer of $54.20 per share represented a 38% premium on Twitter’s stock, suggesting a significant potential for additional value creation. In this sample class we will take a close look at the valuation of Twitter and apply valuation techniques to evaluate how Twitter can create value through strategic decisions. In practice, valuation is challenging because it requires modelling the future. These challenges are exacerbated in industries undergoing change due to new technology or changing consumer behavior.   During the seminar, you will learn about: ·        Basic valuation tools and techniques ·        Practical application of valuation to business cases ·        Valuation of apps and social network companies ·        Elon Musk’s decision to invest in the social media industry in 2022 ·        What you can (and cannot) learn about business cases from valuation techniques