Feature: Tweet Success

How Much is Twitter Worth?

Author: Adi Gaskell
Published: February 27, 2013 at 8:40 am

twitter valuationIt seems bizarre to attribute sky high valuations to Twitter.  They don't have the revenue generating machinery of Google, nor the vast reach of Facebook to justify their current valuation of $10 billion or so.

What they do have however is an enormous ability to influence the zeitgeist.  The Oscars were living testimony to the influence as stars looked to grab their bit of the Twitter highlight.

With rumors of a Twitter IPO this year growing stronger, is this enough to grant them a bumper valuation?

Revenue from the site is estimated to be around $800 million in 2014, although some believe this to be more like $1 billion.

The Wall Street Journal have undertaken a more thorough investigation of the companies financials to explore just what merits a fair valuation for the site.

It believes that the $4 per each of the sites 200 million monthly active users can easily jump to around the $7 mark by 2016.

If it can achieve this revenue per user growth, whilst at the same time continuing to grow users by 40% a year and the site will rapidly have 500 million members.

If they can do this, and it does remain a big if considering overseas competition, this will give the company revenue of around $3.5 billion a year.

A major attraction of the site is that costs remain very small.  Content is provided for free by users, with advertisers also doing much of their own work setting up campaigns.

This provides the company with profit margins, some in the industry believe to be as high as 40%.

Even if you give the company the same margins as Google (21%), it values the company at $12.5 billion.

Are they worth it?  Time will tell.


About this article

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Article Author: Adi Gaskell

A writer on management issues for publications such as Professional Manager, CMI, HRM Today, Business Works and Technorati. I also cover social media for Social Media Today, DZone and Social Business News.

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