NEWS
11/12/2009 10:37:00 AM
How much is Twitter worth?
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With more than 70 million users, it is no wonder Twitter is creating a buzz. But will that buzz equal dollars?
Twitter has been valued by T. Rowe Price, Insight Venture Partners, Spark Capital and Institutional Venture Partners at a remarkable $1.1 billion, but according to a research firm quoted in a New York Times report, that figure could be far too high.
NeXtUp Research said it values Twitter at between approximately $526 million to $674 million. It based the valuation of Twitter on concern that it is lacking in revenues and worries that if Twitter tries to make a leap to money-making services, it could alienate its user base. Twitter has a marketing appeal, but advertisements, for example, are one of the potential revenue sources that could turn off its users, according to the report.
The report estimated that Twitter will make between $114 million and $134 million in 2013 and $148 million in 2014. That doesn't take into account what Twitter could make from licensing its data to Microsoft and Google, but that potential reveune is unknown at this point.
One possible solution offered is an opt-in strategy for advertisements. According to the report, Dell indicated it generated $3 million in revenues from June 2007 to June 2009 through a marketing initiative to its followers who had to opt-in to receive the ads.
The report says it believes there are hundreds of businesses that could generate $1 million plus in revenues from similar strategies, which would enable Twitter to take its share.
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