In June 2016, Twitter invested $70m in music-streaming service SoundCloud: a partnership that seemed quite exciting at the time. A year and a half on, and Twitter has written off $66.4m of that investment, according to its latest annual report.
“In the year ended December 31, 2017, the Company determined that the estimated fair value of a cost-method investment, valued using Level 3 inputs, was below its carrying value and that the carrying value of this investment was not expected to be recoverable within a reasonable period of time,” is how Twitter put it, without naming SoundCloud but while making it clear which investee it was referring to by adding that this was “based on the investee completing a financing with third parties and reorganisation”.
That new financing was with the Raine Group and Temasek in August 2017, reportedly at a valuation of just $150m for SoundCloud, compared to $700m at the time Twitter invested in the company.
Then again, Twitter might prefer to have written off $66.4m at this point than to have acquired SoundCloud – as was rumoured in May 2014 – and thus been responsible for the company’s entire financial situation.