What is Twitter’s real worth?

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SummaryTwitter’s eventual game is power and influence, invaluable assets which are left strictly alone by the valuation process

Soon, incredibly soon, TWTR will begin to trade. But it is not going to be a feeding frenzy like the sprawling, chaotic Facebook IPO of last year. Because while Facebook is a creative but conventional way of doing community, Twitter is forging the future of communications from boilerplate. It is not part of the legacy of computing but was inspired by the SMS revolution. The core technology is as simple as a paper clip and its usage is partly community-built. Users who invented the @ and the hashtag turned it into a medium that can serve as a wire service, a promo platform and a narrow-casting system for engineering flashmobs and revolutions. Non-geeks may see Twitter’s multi-role variable geometry as shape-shifting. Wall Street has tried to avoid looking this protean elephant in the room in the eye and has evaluated Twitter largely on financials. Which is even more confusing: Twitter is loss-making but its shares are more expensive than Facebook’s.

When Twitter filed an S-1 request with the US Securities and Exchange Commission a month ago, Wall Street had regarded the news with wall-eyed incomprehension. An S-1 filing is financially tantalising. All it reveals is that the company plans an IPO under $1 billion. It does not have to show its hand immediately, leaving room for speculation. The punters went bananas, predicting that Twitter would go public next year and that its market cap would lie somewhere between $6 billion and $20 billion. These were really wild guesses bracketing Facebook’s IPO of $16 billion last year.

The company has released key figures and declared risks since then, but the market is not much wiser. Twitter is a fine example of the distance which separates Wall Street from Silicon Valley, the distance between people who value the present and those who understand future value. Wall Street had looked mainly at profits (huge losses, actually. Earliest profits expected in 2015) and revenues. In the first half of the year, the company had earned $221 million in advertising and $32 million from data licensing. In comparison, Facebook’s six-month revenues are set to cross $2 billion.

In October, some analysts had called down the curtain on the era of social media. Facebook and Linkedin have had IPOs and YouTube was swallowed whole by Google. After Twitter, it was suggested, future investments would be attracted by post-social technologies as yet unknown. This assessment is rather bizarre because the

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