So what did the people familiar with the matter blab about this time? Even though it made $45 million in revenue (Promoted Trends has been selling out!), Twitter lost money this year, due to hiring and buying datacenters.
Despite not being profitable, Twitter still values itself in the neighborhood of $8 billion to $10 billion, which at the high end is a little over 222 times its 2010 revenue and 100x its projected revenue ($100 million to $150 million) for next year.
But screw prices “based on financial multiples,” says the tech bubble (and the article). The WSJ brings in a VC to explain why Facebook is now worth $50 billion, Groupon is now worth $15 billion, The Huffington Post is now worth $315 million and Twitter is now apparently worth $10 billion, “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.’”
I guess the “market” is what people are calling Google and Facebook these days. And Google is clearly the front runner here.
Acquiring Twitter would not fit at all with Facebook’s acquisition strategy, which has up until now mostly focused on talent collection versus product, and is geared toward mobile and location. Twitter has 350 employees which is about 35 times larger than your average Facebook acqui-hire. Not to mention that at the $10 billion valuation Facebook would be putting up 20% of the value of its own company.
Google on the other hand has $35 billion to spend and is rumored to be bulking up its social layer full force. Twitter would be a smart buy on multiple levels (but especially consumer perception) as it gears up to compete with Facebook. In fact many Twitter employees have already worked at Google including CEO Dick Costolo and co-founder Evan Williams.
The rest of the WSJ article attempts to downplay the signifigance of the talks between the three companies, calling the inquiries “latent interest” “low-level” and referring to discussions as having “so far gone nowhere.” Most likely this is because Twitter prefers to solidly remain in the niche between a Facebook and a Google without having to make either choice, especially as its valuation and user numbers climb.
Facebook is the world’s largest social network, with over 500 million users. Facebook was founded by Mark Zuckerberg in February 2004, initially as an exclusive network for Harvard students. It was a huge hit: in 2 weeks, half of the schools in the Boston area began demanding a Facebook network. Zuckerberg immediately recruited his friends Dustin Moskovitz and Chris Hughes to help build Facebook, and within four months, Facebook added 30 more college networks. The original idea for the term...
Twitter, founded by Jack Dorsey, Biz Stone, and Evan Williams in March 2006 (launched publicly in July 2006), is a social networking and micro-blogging service that allows users to post their latest updates. An update is limited by 140 characters and can be posted through three methods: web form, text message, or instant message. The company has been busy adding features to the product like Gmail import and search. They recently launched a new site section called “Explore” for...
Google provides search and advertising services, which together aim to organize and monetize the world’s information. In addition to its dominant search engine, it offers a plethora of online tools and platforms including: Gmail, Maps and YouTube. Most of its Web-based products are free, funded by Google’s highly integrated online advertising platforms AdWords and AdSense. Google promotes the idea that advertising should be highly targeted and relevant to users thus providing them with a rich source of information....
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