I still don't really understand why Twitter's growth slowed. It was their's to not mess up, but then straight down they've gone. How annoying.
In any event, based on their current projected growth rate (27.51%), full year 2015 revenue ($2,218,032,000), and 2015 profit margin (25.15%) (which is likely BS, as they seem to be losing money), it seems they are worth about $8 or $12 billion.
One way to determine valuation is to divide growth rate by 10, add 1, then multiply in yearly revenue (27.51 / 10 + 1 = 3.751; 3.751 * $2,218,032,000 = $8,319,838,032). Or, as seems to be the trend recently, one could divide growth rate by 10, double it, then multiply in yearly revenue (27.51 / 10 * 2 = 5.502; 5.502 * $2,218,032,000 = $12,203,612,064).
These estimates usually assume 30% profit margin, so one can factor that out (as Twitter's seems to be ~25%) by applying the scaled multiple to "profit" (27.51 / 10 + 1 = 3.751; 3.751 / .3 = 12.5; 12.5 * $557,807,000 = $6,972,587,500) (27.51 / 10 * 2 = 5.502; 5.502 / .3 = 18.34; 18.34 * $557,807,000 = $10,230,180,380). One would then add in Twitter's estimated net assets (~$4.556 billion) to get a final estimated worth.
That is, Twitter is worth either $11.53 billion, or $14.79 billion (depending on how you look at it). As their market cap is $17.25 billion, and the media is suggesting offers are in the range of $25-30 billion, it's likely any acquirer will pay much much more than Twitter is worth, or all potential bidders will bow out, as Twitter's asking price is too high.
Also, no matter how you look at it, Twitter's employee count seems to be ~2x what it should be. So, either there'll be a large number of layoffs, or they'll have to stop hiring completely and "ride the wave" until their revenue/potential increases to be inline with their employee count.
Even just looking at what Twitter does, it's hard to see why 4,000 employees are needed. WTF are they doing? It's just another sign they are likely being thoroughly mismanaged. This is further supported by the abysmal senior management rating (3.2, versus a target of 4.0 or 4.2) they received on Glassdoor.
In any event, based on their current projected growth rate (27.51%), full year 2015 revenue ($2,218,032,000), and 2015 profit margin (25.15%) (which is likely BS, as they seem to be losing money), it seems they are worth about $8 or $12 billion.
One way to determine valuation is to divide growth rate by 10, add 1, then multiply in yearly revenue (27.51 / 10 + 1 = 3.751; 3.751 * $2,218,032,000 = $8,319,838,032). Or, as seems to be the trend recently, one could divide growth rate by 10, double it, then multiply in yearly revenue (27.51 / 10 * 2 = 5.502; 5.502 * $2,218,032,000 = $12,203,612,064).
These estimates usually assume 30% profit margin, so one can factor that out (as Twitter's seems to be ~25%) by applying the scaled multiple to "profit" (27.51 / 10 + 1 = 3.751; 3.751 / .3 = 12.5; 12.5 * $557,807,000 = $6,972,587,500) (27.51 / 10 * 2 = 5.502; 5.502 / .3 = 18.34; 18.34 * $557,807,000 = $10,230,180,380). One would then add in Twitter's estimated net assets (~$4.556 billion) to get a final estimated worth.
That is, Twitter is worth either $11.53 billion, or $14.79 billion (depending on how you look at it). As their market cap is $17.25 billion, and the media is suggesting offers are in the range of $25-30 billion, it's likely any acquirer will pay much much more than Twitter is worth, or all potential bidders will bow out, as Twitter's asking price is too high.
Also, no matter how you look at it, Twitter's employee count seems to be ~2x what it should be. So, either there'll be a large number of layoffs, or they'll have to stop hiring completely and "ride the wave" until their revenue/potential increases to be inline with their employee count.
Even just looking at what Twitter does, it's hard to see why 4,000 employees are needed. WTF are they doing? It's just another sign they are likely being thoroughly mismanaged. This is further supported by the abysmal senior management rating (3.2, versus a target of 4.0 or 4.2) they received on Glassdoor.