Twitter is holding "low-level talks" with Google, Facebook, and other suitors over a possible acquisition, The Wall Street Journal reports. But what really has everyone all atwitter is the suggested price tag: $8-10 billion. Is that valuation realistic for a company that lost money last year and is expected to earn only $100 million this year?
No — what are people thinking? There's no way $10 billion makes any sense, says Nils Pratley in The Guardian. Two months ago, Twitter's fundraising suggested a valuation of $3.9 billion, and nothing's changed since to warrant this new price tag. To put it in perspective, $10 billion is 100 times this year's expected revenue, or "$57 a head" for every Twitter user. "That's one hell of a lot of advertising" to scare up. Clearly, "this is a bubble."
"Twitter for $10bn? Don't form a queue"
Sure, why not $10 billion? It's a mistake to fret over "silly ratios designed to make the valuation look as outlandish as possible," says Felix Salmon in Reuters. Twitter's value is in its user data, and in its potential to become an "indispensable service for millions of people" worldwide. For Google and Facebook, it's value is even greater: If one of them buys it, "the other one won't own it."
"Understanding Twitter's valuation"
This is all hypothetical, anyway: If Google and Facebook are involved, "a bidding war even at these lofty levels wouldn't come as a surprise," says Rick Aristotle Munarriz in The Motley Fool. They have that kind of money, and each probably thinks it can somehow "crack the monetization nut." But Twitter almost certainly isn't for sale. And if it were, regulators wouldn't "let Facebook or Google get their grubby hands on Twitter at any price."
"Is Google buying Twitter?"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- How academia's liberal bias is killing social science
- 43 TV shows to watch in 2014
- Why Pakistan won't hunt down the terrorists within its borders
- What would a U.S.-Russia war look like?
- Pope Francis' American problem
- Sorry, GOP, tax cuts don't pay for themselves
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- A brief history of the Christmas present
- Diagnosing the Home Alone burglars' injuries: A professional weighs in
- Hey, bosses: Stop giving bonuses to your employees
Subscribe to the Week