Friday, February 11, 2011

Twitter is worth between 30 and 50 billion USD

Twitter for the masses

Twitter for the masses © fintag

News comments:
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.

Today's shorts:
Deal Journal disputes Twitter being worth USD10 billion (wall street journal)

Today's longs:
Liz Hurley and Shane Warne have live twitter sex (telegraph)

Gossip:
Twitter is just group SMS. It really is.



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