Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Twitter Inc., FCFF 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, 2 See details »
The financial trajectory from 2017 to 2021 reveals a significant deterioration in the company's ability to generate free cash flow to the firm (FCFF), characterized by a sharp divergence between operating cash generation and capital requirements.
- Net Cash Provided by Operating Activities
- Operating cash flows demonstrated an initial growth phase, peaking in 2018 at US$ 1,339,711 thousand. This was followed by a period of stability in 2019, after which a consistent downward trend emerged. By December 31, 2021, operating cash flow had declined to US$ 632,689 thousand, representing a reduction of approximately 53% from its 2018 peak.
- Free Cash Flow to the Firm (FCFF)
- The FCFF exhibited a more severe decline than operating cash flows. After reaching a high of US$ 883,262 thousand in 2018, the figure decreased moderately in 2019 before experiencing a precipitous drop to US$ 162,111 thousand in 2020. The trend culminated in a negative FCFF of US$ -347,098 thousand by the end of 2021, indicating that the firm's cash outflows for investments exceeded its cash inflows from operations.
- Analysis of Cash Flow Divergence
- A widening gap is observed between the net cash provided by operating activities and the FCFF. While the difference between these two metrics was US$ 146,525 thousand in 2017, it expanded significantly to US$ 979,787 thousand by 2021. This widening variance suggests a substantial increase in capital expenditures or other investments into the firm, which accelerated as operating cash flows were simultaneously declining.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Interest Paid, Net of Tax
Twitter Inc., interest paid, net of tax 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).
2 2021 Calculation
Interest paid in cash, tax = Interest paid in cash × EITR
= 41,754 × 46.14% = 19,265
3 2021 Calculation
Interest costs capitalized, tax = Interest costs capitalized × EITR
= 1,500 × 46.14% = 692
The financial data reveals significant volatility in interest-related cash outflows and a notable shift in the effective income tax rate between 2017 and 2021.
- Cash Interest Payments
- Interest paid in cash, net of tax, remained relatively stable between 2017 and 2019, fluctuating between US$ 9.09 million and US$ 11.49 million. A substantial increase was observed in 2020, where payments surged to US$ 30.42 million, representing a more than 200% increase from the prior year. Although this figure decreased to US$ 22.49 million in 2021, it remained significantly higher than the baseline established between 2017 and 2019.
- Capitalized Interest Costs
- Interest costs capitalized, net of tax, showed a gradual upward trend from 2017 to 2019, peaking at US$ 3.63 million. This trend reversed after 2019, with a sharp decline occurring in 2021, where costs fell to US$ 0.81 million, the lowest level recorded in the five-year period.
- Effective Income Tax Rate (EITR)
- The EITR exhibited a period of stability at 21.00% from 2018 through 2020, following an initial rate of 35.00% in 2017. A significant anomaly occurred in 2021, with the rate spiking to 46.14%, indicating a substantial increase in the tax burden which impacts the net-of-tax valuation of interest expenses.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Enterprise Value to FCFF Ratio, Current
Twitter Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 27,964,121) |
| Free cash flow to the firm (FCFF) | (347,098) |
| Valuation Ratio | |
| EV/FCFF | — |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Alphabet Inc. | 46.64 |
| Comcast Corp. | 8.04 |
| Meta Platforms Inc. | 32.89 |
| Netflix Inc. | 27.33 |
| Walt Disney Co. | 20.39 |
| EV/FCFF, Sector | |
| Media & Entertainment | 42.31 |
| EV/FCFF, Industry | |
| Communication Services | 48.42 |
Based on: 10-K (reporting date: 2021-12-31).
1 Click competitor name to see calculations.
If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.
Enterprise Value to FCFF Ratio, Historical
Twitter Inc., historical EV/FCFF 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) | ||||||
| Enterprise value (EV)1 | 26,874,573) | 53,314,370) | 26,222,699) | 20,098,812) | 21,915,185) | |
| Free cash flow to the firm (FCFF)2 | (347,098) | 162,111) | 782,134) | 883,262) | 684,684) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | — | 328.88 | 33.53 | 22.76 | 32.01 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Alphabet Inc. | 27.17 | — | — | — | — | |
| Comcast Corp. | 15.77 | — | — | — | — | |
| Meta Platforms Inc. | 15.40 | — | — | — | — | |
| Netflix Inc. | 335.37 | — | — | — | — | |
| Walt Disney Co. | 78.66 | 63.77 | — | — | — | |
| EV/FCFF, Sector | ||||||
| Media & Entertainment | 24.79 | — | — | — | — | |
| EV/FCFF, Industry | ||||||
| Communication Services | 31.50 | — | — | — | — | |
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).
3 2021 Calculation
EV/FCFF = EV ÷ FCFF
= 26,874,573 ÷ -347,098 = —
4 Click competitor name to see calculations.
The financial performance from 2017 to 2021 demonstrates a significant divergence between market valuation and cash flow generation. While enterprise value experienced extreme volatility, the capacity to generate free cash flow to the firm deteriorated progressively, culminating in a negative cash position by the end of the period.
- Enterprise Value Trends
- The enterprise value remained relatively stable between 2017 and 2019, fluctuating between approximately 20 billion and 26 billion US dollars. A substantial peak occurred in 2020, where the value surged to 53.3 billion US dollars, representing a more than twofold increase from the previous year. By 2021, the valuation reverted to 26.9 billion US dollars, aligning closely with 2019 levels.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF showed stability between 2017 and 2019, peaking at 883 million US dollars in 2018. However, a sharp downward trend emerged in 2020, with cash flow dropping to 162 million US dollars. This decline accelerated into 2021, resulting in a negative FCFF of 347 million US dollars, indicating that cash outflows for capital expenditures and operations exceeded cash inflows.
- EV/FCFF Ratio Interpretation
- The EV/FCFF ratio exhibited a period of relative stability from 2017 to 2019, ranging between 22.76 and 33.53. In 2020, the ratio spiked to 328.88, driven by the concurrent surge in enterprise value and the precipitous drop in cash flow. For the 2021 period, the ratio is not applicable as the negative FCFF precludes a meaningful valuation multiple.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?