Is Twitter worth $1 billion?
Sep 16th 2009 8:11PM
Updated Dec 4th 2009 3:30PM
TechCrunch reports that Twitter is about to sign a contract to take an investment of $50 million that would value the company at $1 billion. On a per-user basis, that valuation would make Twitter worth 1.5 times more than Facebook. And that would be a nice payday for the earlier Twitter investors.
It's particularly attractive for a company that, unlike Facebook, currently has no revenues. Yet it is amazing how much Twitter has penetrated the national psyche since February when I interviewed co-founder Biz Stone. Back then, Twitter had a total of $55 million in venture capital and claimed that it had grown at 900 percent since early 2008.Is there any logic for valuing Twitter at $1 billion? The short answer is that if Twitter can find a way to generate revenues, its rapid growth would surely be worth something. No official numbers are available on the number of Twitter users -- although TechCrunch estimated 25 million -- which would place Twitter's value at $40 a user.
This compares to Facebook's value of $26.67 for each of its 300 million active users -- based on an $8-billion valuation this May as TechCrunch reported. Of course, Facebook estimates that it will generate $550 million in revenues this year while Twitter does not have any revenues.
While Twitter has not yet figured out how to get users or advertisers -- or anyone else besides investors -- to pay for it -- with a $1-billion valuation it may be able to hire someone who can.