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29-Mar-2016 04:26

Should Twitter come to market at the end of this year, as predicted, its valuation will be nowhere near that claimed by Facebook.

But what could the world's busiest grapevine be worth?

"Unlike Facebook, which waited too long to IPO (until its growth rate decelerated), Twitter will IPO at just the right inflection point: while revenue grows in triple digits." Companies are usually valued according to their underlying profit, but it is likely that Twitter is still loss-making as the company invests to grow.

Because it has filed for a confidential initial public offering, financial details remain hidden for the time being. Priv Co believes the float will be "conservatively priced" at 20 to 30 times revenue.

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The year of its IPO, Google earned roughly 0m, on revenues of .2bn.With 2013 revenues expected to exceed 0m, this would make Twitter worth between bn and bn.But these numbers are not particularly conservative when compared to Facebook and the bn valuation placed on Google at its IPO in 2004.With its 200m users sending an average of two tweets a day, Twitter may not have Facebook's scale but those who are on the platform use it intensely.

Its initial valuation was therefore just seven times revenues.

However, Twitter's early forays into advertising have been a success, particularly on the increasingly important small screen of the smartphone, where much of its traffic comes from.

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