Twitter’s Valuation Amidst Slowing User Growth

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Twitter’s Valuation Amidst Slowing User Growth
Twitter’s Valuation Amidst Slowing User Growth

Twitter’s Valuation Amidst Slowing User Growth

Market observers believe that though Twitter Inc.’s user growth is slowing and there are no indications of a turning a profit, it is still worth $12.8 billion and may increase later on. The $12.8 billion figure has been estimated from the fair value that Twitter put on its shares in its IPO filing which it did last week.

Some other companies put Twitter’s valuation close to between $15 billion and $20 billion once it begins trading. Thus, it looks like Twitter is not actually worried about its losses and slowing user growth and expects a fantastic beginning in the stock market. Investors are willing to place their money as they believe that Twitter can increase revenue at a rapid clip.

According to these investors, as Twitter expands globally and draws advertising dollars from companies seeking access to its more than 200 million monthly active users, it will be able to generate huge profits later on. Their hypothesis is based on the report that Twitter has more than doubled revenue annually as companies advertise on the service.

Investors compare Twitter with Facebook’s IPO and opine that far from a Facebook-like experience, this company’s stocks will surge when the shares begin to trade and the valuation may immediately reach $15 billion and may be after couple of years, Twitter will be worth $40 billion to $60 billion.

Slowing User Growth

Though Twitter may be happy about higher valuation, it has slow user growth. It admits that there are 215 million monthly active users in its S-1 Filing. Remarkably, the company had close to 200 million users at the end of 2012; this means it added just 15 million users this year so far. Some other sources say that Twitter now has around 240 million users and by the end of the year it may reach to 260 million mark.

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When compared to Facebook, Twitter does not stand anywhere as Facebook has more than 815 million monthly active users. However, the bright side of Twitter is that it has close to 100 million daily active users and out of these 75% access the site from a mobile device which generates hopes that it will benefit from mobile advertising.

Twitter is expecting to expand its popularity in emerging markets and for that it has started sending its senior officials to various international destinations who are not leaving any stone unturned to make Twitter more popular than Facebook.

To contact the reporter of this story: Jonathan Millet at john@forexminute.com