- French authorities charged Telegram CEO Pavel Durov with a number of crimes this week.
- Telegram’s funds reveal a $108 million loss on $342 million of income final 12 months, the FT experiences.
This week French authorities charged Telegram CEO Pavel Durov with a number of crimes. But within the months earlier than that, he was telling individuals he would possibly take his firm public, and floated a $30 billion valuation for his messaging/social media firm, which boasts greater than 900 million customers.
Now the Financial Times says it has gotten a have a look at Telegram’s 2023 funds, and people numbers make it very arduous to think about the corporate might persuade individuals it is price something like $30 billion — even when its founder and CEO wasn’t taking a look at jail time.
The huge headline numbers: Last 12 months Telegram misplaced $108 million on income of $342 million, in line with the FT.
It’s not unusual for fast-growing shopper tech corporations to be cash losers after they go public. Twitter did that in 2012, and Reddit did it this 12 months.
The larger purple flag for Telegram is the reported make-up of its enterprise: While it makes a modest sum of money from typical social media vectors — promoting and premium subscriptions — it makes 40% of its complete from crypto companies, the FT experiences. It operates a digital “pockets” the place customers can retailer crypto cash and the like, and it sells digital collectibles, like usernames, to its customers. And that enterprise appears to run totally on Toncoin, a cryptocurrency initially constructed by Telegram.
The complete setup, because the FT notes, makes it seem to be Telegram is “a crypto agency with a sideline in messaging.” Telegram did not reply to a request for remark.
You can construct an actual enterprise as a crypto buying and selling hub, and that may be fairly useful: see Coinbase, presently price some $45 billion.
But asking traders to determine if Telegram is a social media firm like Twitter, a messaging app like Whatsapp, or… one thing else, fueled by a semi-obscure digital coin, can be an actual ask.
And that is earlier than you get to the difficulty of Durov’s proposed valuation, and Telegram’s very modest present enterprise, which do not sync up in any respect. Coinbase, as an illustration, eked out a small revenue final 12 months on revenues of $2.9 billion. Twitter, previous to Elon Musk’s 2022 buy, had been price round $25 billion, and was doing round $5 billion a 12 months. Reddit, presently price $10 billion, did $800 million final 12 months. It’s actually arduous to see how Telegram’s $342 million stacks as much as these.
Presumably any bankers working Telegram’s theoretical Stock Launch would play up the concept whereas Telegram’s high line is pretty modest, it’s doing all of that with a teeny tiny employees of about 50 individuals. And that will give the corporate the power to provide really magnificent margins, someday, because the enterprise matures.
But that will likely be a a lot tougher promote after this month.
While we nonetheless do not totally perceive the French case in opposition to Telegram, it appears to heart across the firm’s deliberate coverage of doing virtually zero moderation, and an alleged unwillingness to adjust to authorities requests to battle unlawful conduct on the platform.
Durov has stated Telegram’s no-moderation, no-compliance stance is a political/theological one. But it additionally has an actual enterprise part: As each huge social community has realized, maintaining a tally of what occurs in your platform, and coping with regulators who desire a say about that, is a really costly proposition that includes paying a number of people. Right now, Durov does not have to fret about that.
But if Durov desires to placate the French authorities — and perhaps others who’re taking a look at related fees — he could very effectively need to agree to vary the way in which he runs his enterprise and rent much more individuals.
Who is aware of? Maybe that will make it extra useful in the long term. But it could positively ding the corporate’s P&L within the near-term.
