| lots of user X advertising = profit valuation typically comes from: profit X magic multiplier where your magic multiplier is functionally a premium based on twitter's future profit potential they're a publicly traded company, and last I remember they report their earnings publicly to shareholders according to http://www.cnbc.com/id/102573751
their earnings were $436 million ---------------- I've noticed more and more ads on twitter: in their android widget, on their apps, on their site. I'm constantly getting emails asking me to use a twitter ads coupon or read about new ads features. |
Twitter is in danger of pulling a Myspace. At Myspace, revenue went down, ad density was raised to compensate, usage went down, ad density was increased to compensate, then usage crashed. For a publicly held ad-based growth company, a down quarter is a disaster. The valuation as a growth company ends and the company starts to be valued based on its operations and earnings. Twitter currently has negative earnings.
Investors are now asking why Twitter costs so much money to run. Their revenue is $1.3 billion a year, yet they're losing money. They don't pay for content, their basic product isn't that complicated, and bulk compute and network costs are declining. Something is wrong there.