Market Value Added (MVA)
Market value added (MVA) is the difference between a firm fair value and its invested capital. MVA is a measure of the value a company has created in excess of the resources already committed to the enterprise.
MVA
Twitter Inc., MVA calculation
US$ in thousands
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial trajectory between 2017 and 2021 is characterized by a significant divergence between the steady growth of invested capital and the high volatility of market valuation, which directly impacted the Market Value Added (MVA).
- Market Value Trends
- The market value exhibited substantial fluctuations over the five-year period. After a slight decline in 2018, the valuation entered a growth phase, culminating in a peak of US$ 57.37 billion in 2020. This represents a surge of approximately 97.6% from the 2019 valuation. However, this peak was followed by a sharp correction in 2021, with the market value receding to US$ 30.58 billion, effectively returning to levels observed in 2019.
- Invested Capital Growth
- In contrast to the volatility of market valuation, invested capital demonstrated a consistent and linear upward trend. Starting at US$ 4.63 billion in 2017, the capital base expanded every year, reaching US$ 7.45 billion by the end of 2021. This steady increase indicates a continuous commitment of resources into the company's operations regardless of external market sentiment.
- Market Value Added (MVA) Analysis
- The MVA, which measures the difference between the market value and the invested capital, mirrored the volatility of the market capitalization. MVA grew from US$ 19.63 billion in 2017 to a historic peak of US$ 51.40 billion in 2020, signaling a period where the market's perception of future growth far exceeded the historical capital investment. By 2021, the MVA contracted to US$ 23.13 billion. This decline was driven by the simultaneous occurrence of a decreasing market value and an increasing capital base, resulting in a significant compression of the value added by the company from a shareholder perspective.
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MVA Spread Ratio
Twitter Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | 23,128,800) | 51,403,347) | 23,739,860) | 17,742,607) | 19,627,666) | |
| Invested capital2 | 7,449,784) | 5,970,409) | 5,287,225) | 5,185,025) | 4,627,898) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 310.46% | 860.97% | 449.00% | 342.19% | 424.12% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Alphabet Inc. | 988.84% | — | — | — | — | |
| Comcast Corp. | 50.35% | — | — | — | — | |
| Meta Platforms Inc. | 579.06% | — | — | — | — | |
| Netflix Inc. | 453.21% | — | — | — | — | |
| Walt Disney Co. | 103.57% | 101.22% | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2021 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 23,128,800 ÷ 7,449,784 = 310.46%
4 Click competitor name to see calculations.
An analysis of the financial metrics from 2017 to 2021 reveals a divergence between the steady growth of invested capital and the high volatility of market value added. While the capital base expanded consistently, the market's valuation of that capital fluctuated significantly, culminating in a peak in 2020 followed by a sharp contraction in 2021.
- Invested Capital Growth
- Invested capital maintained a consistent upward trajectory throughout the observed period. Starting at 4,627,898 thousand US$ in 2017, the figure grew annually to reach 7,449,784 thousand US$ by the end of 2021. This steady increase indicates a continuous commitment of resources into the company's operations.
- Market Value Added (MVA) Volatility
- Market value added exhibited substantial fluctuations. Following a decrease in 2018 to 17,742,607 thousand US$, MVA rose in 2019 and surged to a peak of 51,403,347 thousand US$ in 2020. This peak was followed by a significant decline in 2021, where the value dropped to 23,128,800 thousand US$, effectively erasing the gains seen during the 2020 surge.
- MVA Spread Ratio Trends
- The MVA spread ratio mirrored the volatility of the MVA, reflecting the efficiency of value creation relative to invested capital. The ratio fluctuated from 424.12% in 2017 to a period high of 860.97% in 2020, suggesting an extraordinary expansion in market valuation relative to the capital employed. However, by 2021, the ratio fell to 310.46%, the lowest level within the five-year window, indicating that the market value added declined even as the invested capital base reached its highest point.
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MVA Margin
Twitter Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | 23,128,800) | 51,403,347) | 23,739,860) | 17,742,607) | 19,627,666) | |
| Revenue | 5,077,482) | 3,716,349) | 3,459,329) | 3,042,359) | 2,443,299) | |
| Add: Increase (decrease) in deferred revenue | 17,223) | (6,809) | 30,051) | 11,125) | (5,835) | |
| Adjusted revenue | 5,094,705) | 3,709,540) | 3,489,380) | 3,053,484) | 2,437,464) | |
| Performance Ratio | ||||||
| MVA margin2 | 453.98% | 1,385.71% | 680.35% | 581.06% | 805.25% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Alphabet Inc. | 655.85% | — | — | — | — | |
| Comcast Corp. | 99.16% | — | — | — | — | |
| Meta Platforms Inc. | 454.84% | — | — | — | — | |
| Netflix Inc. | 529.22% | — | — | — | — | |
| Walt Disney Co. | 263.91% | 272.21% | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 MVA. See details »
2 2021 Calculation
MVA margin = 100 × MVA ÷ Adjusted revenue
= 100 × 23,128,800 ÷ 5,094,705 = 453.98%
3 Click competitor name to see calculations.
The financial performance between 2017 and 2021 exhibits a notable divergence between steady operational growth and volatile market valuation. While revenue increased consistently over the five-year period, the market value added experienced significant fluctuations, peaking in 2020 before undergoing a sharp correction.
- Market Value Added (MVA)
- A volatile trajectory is observed in the MVA, which started at 19,627,666 thousand USD in 2017 and decreased slightly in 2018. A period of rapid growth followed, resulting in a peak of 51,403,347 thousand USD by December 31, 2020. This upward trend reversed significantly in 2021, with the value falling to 23,128,800 thousand USD, effectively erasing the gains made during the 2020 surge.
- Adjusted Revenue
- Adjusted revenue demonstrated a consistent and uninterrupted upward trend throughout the analyzed period. Starting at 2,437,464 thousand USD in 2017, revenue grew annually to reach 5,094,705 thousand USD by the end of 2021. This indicates a steady expansion of the company's top-line financial performance, independent of the volatility seen in market valuation.
- MVA Margin
- The MVA margin showed extreme fluctuations, reflecting the instability of the MVA relative to the steady growth of revenue. The margin declined from 805.25% in 2017 to 581.06% in 2018, then recovered and surged to a maximum of 1,385.71% in 2020. By 2021, the margin dropped sharply to 453.98%, the lowest level in the five-year series. This decline is particularly significant as it occurred during the year of highest adjusted revenue, suggesting a substantial contraction in the market's valuation premium relative to the company's operational scale.
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