4 ms·

Twitter revenue is growing at 20% y/y as of last quarter, not 5%.

by hardtke 10y ago

baccheion 10y ago
This leaves them being worth ~$10 billion (revenue * (0.1 * growth + 1)) (or ~$18 billion if the 6.4x multiple LinkedIn got is used). It'll be mighty hilarious to see potential bidders grossly overpay for a company that's already steadily slowing/declining.
- andruby 10y ago
  How exactly is $2B * (0.1 * 5% + 1) == $10B? I genuinely want to understand your valuation formula.
  - baccheion 10y ago
    https://news.ycombinator.com/item?id=12651012 https://news.ycombinator.com/item?id=12651012 According to the poster, the growth rate is 20% not 5%. Either way, to ball park acquisition price, you can divide growth rate by 10, add 1, then multiply in yearly revenue ((growth% / 10 + 1) * revenue). You can also divide growth rate by 10, double it, then multiply in yearly revenue ((growth% / 10 * 2) * revenue). Those estimates assume profit margins of 30%, so if you want to have it all be a multiple of profit, then divide the multiple by 0.3, then multiply that into yearly profit ((growth% / 10 + 1) / .3 * profit --or-- growth% / 10 * 2 / .3 * profit).
  - chucksmash 10y ago
    I don't intuitively understand where that 0.1 comes from but otherwise it looks a lot like a formula for compounded growth of 5% a year that is missing an exponential term.
nikcub 10y ago
Was 20% - referring to future growth, based on guidance for upcoming quarter it is ~5% This is, afterall, the problem that sparked all the acquisition talks
sthommes 10y ago
Underlying driver here is that users are migrating en masse to Facebook now for their professional updates and post streams. Twitter is most impacted, but LinkedIn too. That's why TWTR selling, LNKD sold. The market for users attention, not just the market for their stocks is moving against them. FB is like the wandering Jupiter of our early solar system- the 'grand tack' is sweeping up the smaller bodies in the solar system. Good to be Jupiter..
- new299 10y ago
  Do you have a source for this? I just use (or avoid using) facebook for totally different reasons than I use twitter. On twitter I mostly communicate with people I've never met and have little association with apart from shared interests. It's a great way of meeting new people. Facebook is for communicating with people I already know, many of who are actively searching for alternatives but because "everybody uses it" are locked in.
- sporkenfang 10y ago
  Interestingly, I've avoided using Facebook as much as possible. I keep the profile alive because my siblings expect me to have one and tag me in stupid things I don't allow to actually show up on my wall. I actually log in maybe once every six months because there's nothing to see there, just re-shares and tired memes. Twitter on the other hand I use pretty much daily.

Twitter revenue is growing at 20% y/y as of last quarter, not 5%.

by hardtke 10y ago

Twitter revenue is growing at 20% y/y as of last quarter, not 5%.

This leaves them being worth ~$10 billion (revenue * (0.1 * growth + 1)) (or ~$18 billion if the 6.4x multiple LinkedIn got is used). It'll be mighty hilarious to see potential bidders grossly overpay for a company that's already steadily slowing/declining.

andruby 10y ago
How exactly is $2B * (0.1 * 5% + 1) == $10B? I genuinely want to understand your valuation formula.
- baccheion 10y ago
  https://news.ycombinator.com/item?id=12651012 https://news.ycombinator.com/item?id=12651012 According to the poster, the growth rate is 20% not 5%. Either way, to ball park acquisition price, you can divide growth rate by 10, add 1, then multiply in yearly revenue ((growth% / 10 + 1) * revenue). You can also divide growth rate by 10, double it, then multiply in yearly revenue ((growth% / 10 * 2) * revenue). Those estimates assume profit margins of 30%, so if you want to have it all be a multiple of profit, then divide the multiple by 0.3, then multiply that into yearly profit ((growth% / 10 + 1) / .3 * profit --or-- growth% / 10 * 2 / .3 * profit).
- chucksmash 10y ago
  I don't intuitively understand where that 0.1 comes from but otherwise it looks a lot like a formula for compounded growth of 5% a year that is missing an exponential term.

nikcub 10y ago

Was 20% - referring to future growth, based on guidance for upcoming quarter it is ~5% This is, afterall, the problem that sparked all the acquisition talks

sthommes 10y ago

Underlying driver here is that users are migrating en masse to Facebook now for their professional updates and post streams. Twitter is most impacted, but LinkedIn too. That's why TWTR selling, LNKD sold. The market for users attention, not just the market for their stocks is moving against them. FB is like the wandering Jupiter of our early solar system- the 'grand tack' is sweeping up the smaller bodies in the solar system. Good to be Jupiter..

new299 10y ago
Do you have a source for this? I just use (or avoid using) facebook for totally different reasons than I use twitter. On twitter I mostly communicate with people I've never met and have little association with apart from shared interests. It's a great way of meeting new people. Facebook is for communicating with people I already know, many of who are actively searching for alternatives but because "everybody uses it" are locked in.
sporkenfang 10y ago
Interestingly, I've avoided using Facebook as much as possible. I keep the profile alive because my siblings expect me to have one and tag me in stupid things I don't allow to actually show up on my wall. I actually log in maybe once every six months because there's nothing to see there, just re-shares and tired memes. Twitter on the other hand I use pretty much daily.