photo © 2009 Steve Ryan | more info (via: Wylio) In a post deceptively titled “Twitter as a Tech Bubble Barometer” the WSJ drops a lot of of information about the micro-messaging service, namely that Twitter is talking to both Facebook and Google about a possible acquisition according to those pesky people familiar with the matter who can’t seem to keep their mouths shut.
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.