So the world is all excited over Twitter being bought out by the Huffington Post [Editor: uh?]
The round number being banded about is USD10 Billion. Well if that is the case then this is an absolute bargain.
Using 1 year old Twitter stats (April 2010 Huff Post), my quants have come up with this valuation:
Daily Tweets: 55 million. If for each tweet there was an advert and the advertiser was charged 1 cent per impression, that is USD 550,000.
Twitter Searches: 600 million. If for each tweet there was an advert and the advertiser was charged 1 cent per impression, that is USD 6,000,000.
Yearly income: 365 x 6.550 million = 2.4 billion
Take off say USD250 million to run its servers and pay its 350 engineers, and the EBITDA is 2.1 billion.
A multiple of 15 gives you a valuation of USD32.1 billion.
Of course this is probably understated. Considerably. If Twitter charged for its API, if we assumed these user stats have gone up 100%, if we assumed expenses were overstated then Twitter is probably worth more than Apple.
However, if I use my Facebook valuation of USD300 billion, and Twitter is 20% of its size then Twitter is in fact worth USD60 billion.
Deal Journal disputes Twitter being worth USD10 billion (wall street journal)
Liz Hurley and Shane Warne have live twitter sex (telegraph)
Twitter is just group SMS. It really is.