Peter Kafka

Recent Posts by Peter Kafka

Even After a Small Swoon, Twitter Investors Are Incredibly Optimistic

rocketTwitter investors may be experiencing a bit of IPO hangover today. But so far, at least, they’re still wildly enthusiastic about the company.

At least, they are when you compare Twitter’s stock price and core metrics to similar measuring sticks at LinkedIn and Facebook, which until yesterday were Wall Street’s two favorite social plays.

A quick tale of the tape as of 12:40 pm ET Friday:

Twitter

  • Share price: $43
  • Market cap: $23.4 billion
  • Average monthly active users as of Q3: 231 million
  • Q3 2013 revenue: $168.6 million
  • Q3 2013 operating loss: $63.3 million

LinkedIn

  • Share price: $215
  • Market cap: $25.7 billion
  • Average monthly unique visitors* as of Q3: 184 million
  • Q3 2013 revenue: $393 million
  • Q3 2013 operating income: $4.6 million

Facebook

  • Share price: $47.7
  • Market cap: $115.8 billion
  • Active users as of Q3: 1.19 billion
  • Q3 2013 revenue: $2 billion
  • Q3 2013 operating income: $736 million

Very rough takeaway: Twitter investors are valuing the company at the same level as LinkedIn, even though LinkedIn generates twice as much revenue. And they’re valuing Twitter at about a fifth of Facebook, even though Facebook has more than ten times more revenue.

There is lots of smart — and not so smart — commentary about Twitter’s valuation out now so I won’t add much more to that. Except: If you want to invest in Twitter you should think hard about the company’s U.S. users, who account for 23 percent of its user base but 74 percent of the company’s revenue, and its ad products, which is intriguing to lots of marketers but also very experimental.

Aside from that, I would simply direct you to Felix Salmon’s clever valuation essay from earlier this week, and highlight the kicker: “Twitter is an amazing platform, where nearly all of the value ultimately accrues to the people who use it.”

* LinkedIn doesn’t supply an “active user” number, but points investors to traffic numbers as well as its 259 million “registered member” total.


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Another gadget you don’t really need. Will not work once you get it home. New model out in 4 weeks. Battery life is too short to be of any use.

— From the fact sheet for a fake product entitled Useless Plasticbox 1.2 (an actual empty plastic box) placed in L.A.-area Best Buy stores by an artist called Plastic Jesus