WSJ reports that Twitter Inc. the “fastest growing internet messaging services” is courting a new round of financing from private investors that pegs the company’s value at $7 billion. In a development that has been doubtlessly tweeted by many, the new valuation is nearly double the most recent estimates of the company’s worth, which came seven months ago when Twitter raised $200 million in a finance operation led by Kleiner Perkins Caufield & Byers.
At first glance a valuation of $7 billion seems modest, compared to similar web 2.0 companies such as Zynga (valued at $20 billion) and Facebook (valued at $75-100 billion), though a look at the company’s earnings ($150 million in ad revenues in 2010) indicates that the price tag, at more than 47x the company’s annual sales, may be more inflated than justified.
Some data that could spark more talk of a social media bubble, according to Deal Journal, are the ten private tech companies (Twitter among them) currently valued over $1 billion, compared to a historical total of only 29 private tech firms to reach valuations in that territory. Still think $7 billion is too cheap for Twitter? You’re in good company, as the WSJ spinoff also reports that recent common stock purchases on secondary market SharesPost imply a valuation of $8.34 billion for the company.
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