Twitter WACC - Weighted Average Cost of Capital
The WACC of Twitter Inc (TWTR) is 7.0%.
| Range | Selected | |
| Cost of equity | 6.0% - 8.8% | 7.4% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 4.0% - 5.1% | 4.55% |
| WACC | 5.7% - 8.3% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.46 | 0.7 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.0% | 8.8% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 0.1 | 0.1 |
| Cost of debt | 4.0% | 5.1% |
| After-tax WACC | 5.7% | 8.3% |
| Selected WACC | 7.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| TWTR | Twitter Inc | 0.1 | 0.52 | 0.48 |
| BIDU | Baidu Inc | 0.34 | 1.02 | 0.82 |
| IAC | IAC/Interactivecorp | 0.66 | 0.99 | 0.67 |
| LKCO | Luokung Technology Corp | 91.78 | 0.11 | 0 |
| LOV | Spark Networks SE | 20.48 | 0.45 | 0.03 |
| LTRPA | Liberty Tripadvisor Holdings Inc | 63.68 | 1.04 | 0.02 |
| MTCH | Match Group Inc | 0.51 | 0.36 | 0.26 |
| SFUN | Fang Holdings Ltd | 28.89 | 1.01 | 0.05 |
| SNAP | Snap Inc | 0.25 | 1.11 | 0.94 |
| WB | Weibo Corp | 0.25 | 1.02 | 0.86 |
| Low | High | |
| Unlevered beta | 0.17 | 0.56 |
| Relevered beta | 0.19 | 0.55 |
| Adjusted relevered beta | 0.46 | 0.7 |
Twitter's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for Twitter:
cost_of_equity (7.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.46) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.