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Summary:

If Facebook is worth upwards of $5 billion, then how much do you think Twitter, the San Francisco-based micro messaging startup, is worth? Somewhere in between $441 million and $589 million, if you believe NeXt Up Research, the firm founded by veteran financial analyst, Michael Moe. […]

Click on the image to see the details of Twitter users, Projected Valuation and Revenues. Data from NeXt Up

Click on the image to see the details of Twitter users, Projected Valuation and Revenues. Data from NeXt Up

If Facebook is worth upwards of $5 billion, then how much do you think Twitter, the San Francisco-based micro messaging startup, is worth? Somewhere in between $441 million and $589 million, if you believe NeXt Up Research, the firm founded by veteran financial analyst, Michael Moe. According to some estimates, the company was worth north of $250 million at the time it last raised funding earlier this year.

At those prices, Twitter shares are worth between $19 and $26 each. NeXt Up estimates that in 2013, Twitter should have revenues of “between $114 million and $134 million in revenue with normalized net margins of 25 percent,” as per a report in The San Francisco Business Times. Now that is just crazy talk — for no one, not even Twitter insiders, know how much money they are going to make. NeXt Up is just straight-up guessing.

The research report is available to the members of SharesPost, a market place where startup insiders can trade their stock with others. Three-year-old Twitter has raised more than $59 million in funding from the likes of Spark Capital, Union Square Ventures and Benchmark Capital.

  1. Is twitter better off (valuation wise) not making any money so they can be valued on potential vs a revenue multiplier as it would seem the NeXt Up analysis is doing? We’ll see. I think Twitter may be easier to monetize long term than Facebook because advertisers and brands can decide what content they want to appear with easier than on FB.

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    1. Ari

      I think that indeed is a good case to make. I think it is easier to sell the possibilities that the reality. I think they are smart about the revenue side of things.

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  2. Twitter is clearly moving to a Pay-per-click advertising model with the introduction of their new front page.

    Search is front and center. It would be super-easy for them to put ads in there at this moment and make some decent cash.

    I’d bet a good chunk of change on it.

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  3. Alexander Ainslie Thursday, July 30, 2009

    The “twestion” (sorry couldn’t help that!) I’ve been contemplating is “engagement” as it is the key metric that will drive twitter’s potential to monetize. They currently have say 40-50 million registered members however only an estimated 5-10% are “active” and engaging with the platform. Therefore the factual, monetizable user volume is say 2-5 million tweeps. The good thing here is that it is probable that this active group are not tweens a la MySpace and are therefore represent a higher quality segment to monetize.

    Frankly, at this point, I think it is next to impossible to try to accurately value twitter as they are in the business of building “rail tacks”. The “rolling stock” will come later and the individual wagons are going to be provisioned by many, including twitter.

    Slightly off topic, but relevant:

    If Facebook is worth $5 billion with a reach of 200 million “registered users” and twitter is worth $500 million with 40-50 million “registered user” (both with high percentage of inactive but registered users), then how much is Clearspring (or Gigya, JS-Kit, Disqus, Intense Debate) worth?

    For example, Clearspring, which is what I call a SNSS “Social Network Sub-System” (yep, you heard it hear first folks!), has a reach of 500 million users with high level of engagement and they are harvesting godly amounts of data that can be used to monetize their ecosystems.

    Om: What’s your take on this?

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    1. Alexander,

      Good question and that needs some food for thought. Let me noodle on this?

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      1. Food for thought:

        Listen to Khris Loux (@khrisloux) on this Building 43 video on JS-Kit’s new ❉ECHO commenting system in the context of my Social Network Sub System’s meme: http://bit.ly/ek3Ey – Some interesting fodder for noodling here!

        Question: Is your plain vanilla commenting system on gigaom by design and intentional?

        It would seem to me that using Disqus, Intense Debate or JS-Kit would generate more value and interaction on gigaom.

        I think JS-Kit’s new ❉ECHO is birthing a paradigm shift in commentage and distributed/disaggrated social networking.
        @AAinslie
        http://www.twitter.com/aainslie

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  4. [...] • How Much Do You Think Twitter Is Worth? How about a Half-Billion Dollars >> GigaOm [...]

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  5. Dave Winer comments on twitter:

    RT @davewiner: If Twitter is worth $500 million, we, the public, should buy them, and make the firehose a free public commodity.
    —————————————–

    Dave: I love this idea and it would be a brilliant test case for “CrowdFunding”. It would also be a true litmus test of the value twitter users (i.e. the lifeblood of Twitter as a commercial company) are willing to put on what the twitter platform/medium is really worth to them – not the VC’s.

    The way this may be accomplished is for twitter users to form a not-for-profit and then contribute (donate) into a fund which would then buy Twitter co.

    The upside to this model is that the money donated into the fund would be tax deductible (for US tax payers persons – you would need to set up a mirror registered charity in the UK, which is the 2nd largest twitter user base, to avail UK persons the same facility) and not cost the crowdfunders’ a dime. Effectively the US govt. would be indirectly funding the acquisition. Democracy at work.

    The NFP that acquires twitter can then run twitter corp. as a commercial entity for the benefit of the NFP. Mozilla hybrid model. This model is also being adopted by the likes of Marc Canter (aka “Mr. Digital-Cities-Are-The-New-Black” – formerly “Mr. Open-Is-The-New-Black”!) who has harnessed the model to at his new incarnation, Digital City Mechanics in NEO (North Eastern Ohio).

    Dave: I think this is doable. What do you think? Want to lead the charge? We’ll follow!

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  6. This the same person who thought Whittle Communications was worth over a bbl,it was an absolute failure. I thought Mike was running Think Equity when did he get tossed out? His analytical abilities have always been influenced by IB relationships. I wouldn’t be suprised if he some relationship with Twitter.

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  7. [...] whales” popping up on the site, the big question on everyone’s minds is how Twitter is actually going to start making money. The company made strides in reaching out to the enterprise market last month with the rollout of [...]

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