IS TWITTER’S BILLION BUCK VALUATION SHEER LUNACY, OR JUST PLAIN MADNESS?
September 28th 2009 07:03
When news broke last week that the profit-free internet phenomenon had attracted a $100 million investment and was now "worth" $1 billion, incredulity became the order of the day in many seasoned media quarters.
The reaction is perhaps no surprise, according to Times Online, which said., “Even Silicon Valley has not seen anything like this since Google bought YouTube in 2006, and certainly not since the credit crunch knocked the froth off the world's economy.
“In just 3.5 years, San Francisco-based Twitter has achieved the Silicon Valley dream, going from an obscure start-up to global sensation.”
At $1 billion, Twitter with no revenue is worth as much as General Motors before it went bust, or twice the value of Domino's Pizza – a company with 10,500 employees and actual sales of $1.4 billion last year.
Times Online said, “For some analysts, the idea of a $US1 billion company with no revenues is spookily familiar. Jeffrey Lindsay, an analyst at Sanford C. Bernstein in New York, says the fuss is ‘a throwback to the 1990s fantasy era of internet start-ups.’ He says the investment represents smart money waiting for dumb money to come in and bail it out.
“For others, though, Twitter is something far more exciting. The valuation is not out of line with its peers. Facebook, the online social networking service that claims 300 million active users, announced in May it had received another $100 million investment from Russia's Digital Sky Technologies, valuing it at $6.5 billion.”
The reaction is perhaps no surprise, according to Times Online, which said., “Even Silicon Valley has not seen anything like this since Google bought YouTube in 2006, and certainly not since the credit crunch knocked the froth off the world's economy.
“In just 3.5 years, San Francisco-based Twitter has achieved the Silicon Valley dream, going from an obscure start-up to global sensation.”
Times Online said, “For some analysts, the idea of a $US1 billion company with no revenues is spookily familiar. Jeffrey Lindsay, an analyst at Sanford C. Bernstein in New York, says the fuss is ‘a throwback to the 1990s fantasy era of internet start-ups.’ He says the investment represents smart money waiting for dumb money to come in and bail it out.
“For others, though, Twitter is something far more exciting. The valuation is not out of line with its peers. Facebook, the online social networking service that claims 300 million active users, announced in May it had received another $100 million investment from Russia's Digital Sky Technologies, valuing it at $6.5 billion.”
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