Twitter worth $10 billion?

Is the social-networking site truly that valuable? Or are we seeing another tech bubble?

By Kim Peterson Feb 10, 2011 3:36PM
Credit: (© Nicholas Kamm/AFP/Getty Images)
Caption: Twitter homepageSocial-media companies are smoking hot right now. Groupon turned up its nose at a $6 billion offer from Google (GOOG). LinkedIn is after $175 million in its initial public offering. And Facebook, well, everybody and his brother wants a piece of that.

So it's no surprise that Twitter is watching its value notch up as well. Facebook, Google and others have held "low-level" acquisition talks with Twitter, and those discussions place the company's value at $8 billion to $10 billion, The Wall Street Journal reports. It was only in December that Twitter was valued at $4 billion.

Twitter allows people to post messages capped at 140 characters. Is the service truly worth $10 billion? At any rate, for all the big numbers being tossed about, the acquisition talks have gone nowhere, sources tell the Journal.

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Twitter certainly doesn't have the revenue to support that valuation, bringing in just $45 million in 2010, the Journal reported. The forecast for this year is in the $100 million to $110 million range.

"Are these prices justifiable based on financial multiples? No," one venture capitalist told the Journal. But these start-ups are building social services and have lots of data about their users and "the market is valuing that mightily right now."

Venture firm Andreessen Horowitz has high expectations for Twitter, reportedly snapping up more than $80 million in Twitter shares this week through private-company stock exchanges. Twitter execs want to grow the company into a $100 billion operation, the Journal reported.

Twitter has better real-time information than anyone else, even Facebook. Google, for all its search prowess, offers a real-time search that's mostly a collection of what people say on Twitter.

"One of the best things about Twitter, despite all the problems it has had in the not-too-distant past with reliability and other issues, is that it is totally, 100-percent focused on being a real-time communications network," writes Mathew Ingram on GigaOm.

Twitter has so much data and is so in tune with many of its 200 million registered users that it makes uncannily sound suggestions about who to follow. The service could do wonders with targeted advertising.

The Pew Research Center found that 62% of Internet users are Facebook, while only 12% use Twitter. With those numbers, Reuters' Felix Salmon writes that $10 billion doesn't seem too outrageous a valuation. "If Twitter is 20% the size of Facebook, and Facebook is worth $50 billion, then Twitter can be worth $10 billion, no?"
2Comments
Feb 11, 2011 4:37AM
avatar
Regardless of what they might get, it sounds like the Twitter people are willing to call it quits and take the money and run...live happily ever after if the money was right. Can't say I don't blame them. I would think about doing the same if the money was right.
Feb 11, 2011 12:12AM
avatar
Laughable, at best.
Wake up, KP.
No bubble, just a steady growth as government destroys local business by its fiscal negligence.

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