Want to know how to get valued at $13 billion? Apparently, make sure you lose $79.4M a year, and have your primary business model revolve around sending teenage-like text messages in public.
From a relatively unknown startup to being one of the biggest social media giants in the world of technology, Twitter has certainly come along way from its somewhat humble beginnings back in 2006. This sentiment seems to be only further supported by the recent rumblings of what the company would be pricing its shares at for it’s initial public offering, a price experts are estimating will range between $23 to $25 per share.
If Twitter shares were to be priced at $25, it would mean the company is worth a whopping $13 billion.
Not too shabby.
The real question behind this massive tech IPO is whether Twitter is actually worth $13 billion.
One of the bigger controversies surrounding the launch of this stock is the general scrutiny of Twitter’s business model which revolves mostly around ads. These ads are typically purchased by corporate accounts, and include sponsored content that crop up on news feeds for users of the platform (a good example being ‘purchased’ trending hashtags that companies use to get more impressions for their marketing efforts). The major problem behind this ad revenue plan is that this business model is yet to prove lucrative: Twitter isn’t profitable. Despite pulling in $317 million in sales in 2012 using their ad revenue scheme, they still reported a $79.4M loss that year.
But on the flip side, some argue that their user base (which numbers at 545 million active users) and raw potential to be a cash cow can still merit the aforementioned eyebrow-raising valuation. Just look at Instagram, which had no real business model or method of generating revenue but still pulled in a $1 billion purchase from Facebook purely on its user base alone.
So, if Twitter is worth $13 billion, and Instagram was worth $1 billion, given I still have $7,ooo in student debt (and have massive amounts of raw potential), I figure I’m worth roughly $1.14 million.
Who knew becoming a millionaire was so easy?