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March 7, 2011

Twitter Actually Worth $7.7 Billion? Probably Not

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Twitter CashLet me be frank for one second, auctioning off your company’s private stock is nothing more than a ploy to raise the company’s valuation far beyond what it is actually worth. When stock is auctioned company’s wanting to acquire shares will over value their purchase, leading to higher stock prices and inevitably an inflated valuation. This week Twitter did just that, auctioning off enough company stock that the websites valuation how now skyrocketed to $7.7 billion.

So why would Twitter do such a thing? For one they have been the target of possibly acquisitions by Facebook and Google who have both showed an interesting in the micro-social program and will now have to pay with many more buckets of cash if they are to succeed in their takeover attempts. On a secondary level, Twitter now has more cash to acquire other social media company’s, allowing them to procure talent buys and drive new functionality to the website, an important consideration when you look at the acquisitions made by Facebook, Google, Microsoft and other larger tech firms over the last 12 months.

The new total is nearly double what the company was worth in January and at last check I haven’t seen them grow at a 100% visitor base or for that matter role out any groundbreaking technologies that will revolutionize the way people interact or advertise using the program. read more

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