As Facebook transitions from Silicon Valley’s hottest upstart to humdrum public technology company, the Valley’s many startup obsessives seem to be turning their attention to the younger social media company Twitter.
A research note on Twitter, weighing in at all of 416 words, sparked intense interest in the tech world today after the report’s author told Forbes that Twitter has been valued at $11 billion in some recent trades, up from $8 billion in August 2011. The company behind the research, Greencrest Capital, later said that its own internal valuation model has Twitter closer to the original, lower figure, and cautioned that the apparent surge in Twitter’s value is based on relatively illiquid secondary market trades.
But the company’s caveats couldn’t keep the $11 billion figure out of a flurry of headlines in publications ranging from tech-centric CNET to Wall Street chronicler Business Insider to Britain’s gossipy Daily Mail. Tech observers were particularly excited to hear such a bullish number from report author and noted bear Max Wolff, the Greencrest chief economist who once likened investing in Facebook stock to buying lottery tickets.
“After Facebook’s post-IPO flop, there was a need for a new hero of tech,” says Wolff. “Twitter is showing better engagement growth than Facebook.... I don’t think anyone is selling [Twitter shares] under $9.5 billion right now.”
At the same time, Wolff says $11 billion is a valuation Twitter will need to grow into, “if they have a strong 2013, which I think they will.” Wolff notes that Twitter hired a new chief financial officer, chief operating officer, and design VP right before the holidays.
The 6-year-old startup has yet to find a revenue stream to match up with its hefty valuation. It's been tinkering with sponsored posts and other forms of advertising, but has yet to come up with anything near the billions in ad dollars Facebook generated in the year before it went public. Then again, Twitter's uncertain and thus malleable future just means it's more interesting to handicap the company's prospects, a pastime that seems to get more popular by the day.
