Would you pay $10 billion for a website that hosts posts the length of text messages?Executives at both Facebook and Google have expressed ongoing interest in acquiring Twitter for somewhere between $8 and $10 billion, according to the Wall Street Journal. All three companies involved declined to comment.
Negotiations are by no means approaching the final stages, but it’s interesting to see that the (still fledgling?) microblogging startup continues to attract a prominent crowd of potential buyers.
The funniest thing about this story is that it’s a rerun. Discussions to sell Twitter to one of those two bigger Web entities go back as far as November 2008, when Facebook had offered to purchase the company for $500 million, largely in stock. Though the deal reached late stages, Twitter supposedly walk away because of the meager cash portion offered. Then in April 2009 reports said that Twitter was in late stage negotiations with Google, which was rumored to be offering the startup over $250 million in combined company stock and cash.
That was all before Twitter’s epic growth spurt in mid-2009, when the mainstream media fell in love with the site’s ability to be both a gateway to celebrities and a mouthpiece for revolutions. More recently, in November 2010, sources said Google had “casually” offered Twitter between $2.5 and $4 billion.
It’s worth noting that throughout all these discussions–and this is still the case today–Twitter’s revenue has never matched its valuation, for the most part. At least on a fundamental level. The site has lost money every year it has been in existence. Promoted Products–Promoted Tweets, Promoted Trends, etc.–were introduced last year, bringing 2010 ad revenue for the site to around $50 million, according to eMarketer, but the company still lost money in 2010. The company’s revenue could triple to about $150 million this year, but that’s just an estimate. In the end, it depends on whether advertisers stick with Promoted Products or not.
“The company is having great ad-sales momentum right now, but we still think they need to do something big to increase usage and get more people seeing and interacting with tweets,” said Debra Aho Williamson, an eMarketer analyst. “Most of their advertisers are just experimenting at this point; the challenge will be to get those advertisers to come back and buy more,” she said.
In spite of that, Twitter has a knack for attracting investors as prominent as Kleiner Perkins Caufield & Byers and Andreessen Horowitz because it hosts so much user data. The company just announced last night that users have broken another record; during the last minutes of the Super Bowl on Sunday, fans sent 4,064 tweets per second, the highest for any sporting event. (It still doesn’t beat the 6,939 tweets per second seen on New Years.)
Obviously, not all tweets are created equal, but the big question remains: how much is a tweet really worth?
In spite of that, Twitter has a knack for attracting investors as prominent as Kleiner Perkins Caufield & Byers and Andreessen Horowitz because it hosts so much user data. The company just announced last night that users have broken another record; during the last minutes of the Super Bowl on Sunday, fans sent 4,064 tweets per second, the highest for any sporting event. (It still doesn’t beat the 6,939 tweets per second seen on New Years.)
Obviously, not all tweets are created equal, but the big question remains: how much is a tweet really worth?
