Is Twitter really worth $10 billion?

Potential suitors Google and Facebook apparently value the micro-blogging powerhouse that high, but analysts are skeptical

Twitter, founded by Evan Williams (pictured) and Biz Stone, was reportedly valued at $3.7 billion last December and is now being shopped around for more than double that price.
(Image credit: Getty)

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"

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

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?"

To continue reading this article...
Continue reading this article and get limited website access each month.
Get unlimited website access, exclusive newsletters plus much more.
Cancel or pause at any time.
Already a subscriber to The Week?
Not sure which email you used for your subscription? Contact us