Did Twitter Lose $5 Billion in Value After ‘Banning’ Donald Trump?

Claim

Twitter lost $5 billion in value after "banning" Donald Trump on January 8 2021.

Rating

Decontextualized

Reporting

Twitter’s permanent removal of outgoing United States President Donald Trump on January 8 2021 created extensive discourse and discussions about the limit of speech in the country; among sub-threads was a claim that his favorite social media platform Twitter  ($TWTR) “lost $5 billion in value” as a direct result of its decision to deplatform him:

Anti-abortion disinformation site LifeNews.com addressed the claim in a January 13 2021 post (“Twitter Has Lost $5,000,000,000 in Market Value Since Banning President Trump”), and attributed the purported loss of $5 billion in revenue to Twitter’s decision to remove the @realDonaldTrump account:

Go woke, or go broke? Orwellian platform Twitter has now experienced the effects of that principle for the draconian anti-free speech measures it has wielded lately.

Yahoo! News reported that Twitter shares dive-bombed more “than 10% on Monday [January 11 2021]” following its decision to ban President Donald Trump from its site after the Capitol Hill riot Jan. 6 [2021]. Specifically, the liberal outlet noted that “Shortly after market open Monday [January 11 2021], the stock dropped as much as 12.3% to reach as low as $45.17 per share.”

Business Insider reported the real kicker: Twitter’s stock price loss erased a jaw-dropping “$5 billion from its market capitalization.” Ouch. [Emphasis added.]

Google Trends showed search interest in whether “Big Tech” had been fiscally “punished” for their decision to disallow Trump from their platforms. Popular searches included:

  • “Twitter 5 billion”;
  • “Twitter stock drop”;
  • “Facebook lost 34 billion”;
  • “Twitter lost 5 billion,” and;
  • “Twitter losing users.”

LifeNews.com also referenced a January 11 2021 Business Insider post and its “real kicker,” that Twitter lost $5 billion “from its market capitalization.” The linked article was more speculative:

Twitter stock fell as much as 12% on Monday [January 11 2021] after the social-media company permanently suspended President Donald Trump’s account on Friday evening [January 8 2021]. The share-price decline wiped $5 billion from Twitter’s market capitalization.

[…]

Twitter stock likely fell because investors are worried the Trump ban will erode interest in the platform and lead to boycotts among those who see the decision as politically motivated and a way to silence a major conservative voice.

For context, “market capitalization” is defined as follows:

Market capitalization refers to the total dollar market value of a company’s outstanding shares of stock. Commonly referred to as “market cap,” it is calculated by multiplying the total number of a company’s outstanding shares by the current market price of one share.

As such, when share prices dip, market cap follows — the number of outstanding shares multiplied by a price after a dip is for that time lower, resulting in a lower overall sum based on the share price.

In a vacuum, the cause-and-effect claim looked fairly clear — Twitter decided to revoke Trump’s access to the platform on January 8 2021, and by the next stock market open on January 11 2021, the company had clearly tanked in value, and furthermore, $5 billion was clearly not chump change.

However, popular stock-trading app Robinhood made it easy to look at Twitter’s contemporaneous movement ($TWTR) — in the “one week” timeframe, a large dip was evidenced between the end of trading on January 8 2021 (when Twitter closed at $51.48 a share) and the opening bell on January 11 2021 (when Twitter traded at $46.02 per share):

twitter 5 billion trump ban week

Between market close on the day Trump was banned from Twitter and market open on Monday, Twitter’s shares lost an initial $5.46 a share — a dip of 10.6 percent, which looked very severe. Outlets did not seem to mention that that opening low at 9:30 AM on January 11 2021 of $46.02 had changed within an hour of the opening bell — at 10:10 AM on the same day, Twitter was trading at $48.50 per share.

Moreover, moving the chart from “1W [one week]” to “3M [three months]” indicated Twitter had lost and recouped larger amounts for seemingly no reason within that timeframe.

On the three month chart, there was a significant dip in late October 2020. At the time, Twitter’s price was $52.43 per share on October 29 2020:

twitter 5 billion trump ban 3m 1

Between October 29 2020 and November 2 2020, Twitter dipped down to $39.47 — losing $12.96 per share, or 25 percent of share value in the space of less than four days:

twitter trump ban 5 billion 3m 2

Yet this larger dip did not create headlines everywhere, Twitter shareholders didn’t start dumping the stock left and right, and $TWTR was back in the original range at some point between December 14 and 15 2020.

Robinhood is designed for first-time investors to start trading, and so its interface provides easy access to information about a stock. As of January 13 2021, an “About” section provided a summary of $TWTR:

twitter loses 5 billion trump ban

Per Robinhood, Twitter’s highest price on January 13 2021 was $48.39, and its lowest was $47.59 — opening at $48.17 from the dip price of $46.02 on January 11 2021. It also provided news for individual tickers when available, linking to a January 13 2021 MarketWatch piece which reported of Twitter’s profile among analysts:

Shares of Twitter Inc. TWTR, 1.45% bounced 1.8% in afternoon trading Wednesday [January 13 2021], putting them on track to snap a six-day losing streak, which would be the longest in three years, after MKM Partners analyst Rohit Kulkarni upgraded the social media company, saying the headwinds that have weighed on the stock recently are likely to reverse this year.

On January 13 2021, LifeNews.com reported Twitter had lost $5 billion due to its decision to “ban” Trump on January 8 2021, a claim that was out-of-context and outdated. Stocks like Twitter are popular, volatile, and reactive to any sort of news. Twitter recovered from larger dips in then-recent months, and no one seemed to notice that Twitter recouped over $2 per share in the first 40 minutes of trading on January 11 2021. Overall, Twitter’s stock sustained expected volatility when it entered the global news cycle on January 8 2021, but it was unlikely the decision would permanently affect Twitter’s ticker — which, at the time of publication, was trading at $47.71.

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