Twitter has been valued at $11 billion in a Greencrest Capital report, according to Forbes, which reported the company is eying a possible IPO as early as 2014.
The publication credits recent management hirings, including Ali Rowghani’s promotion from chief financial officer to chief operating officer, the hiring of ex-Zynga employee Mike Gupta as the new CFO, as well as the hiring of Mike Davidson, founder of Newsvine, as vice president. It also noted Twitter’s recent tweaking of its photo app that makes the company more competitive against Instagram.
“Most importantly for investors, Twitter is getting better at making money,” the Forbes piece by Abram Brown noted. “Its promoted tweets are becoming more focused on users who may actually click the link, and Twitter has a strong partnership with Pinterest.”
Greencrest arrived at its valuation through a study of secondary markets.
“Using the secondary market for shares to mark enterprise value is a very difficult and opaque process. It is a rumor-rich and special-share-class soup,” Greencrest’s Max Wolff told Forbes. “That said, Twitter is up since the Facebook IPO and is now valued at northward of $11 billion. This makes sense as growth in users and new monetization efforts are both yielding fruit and pointing toward a good 2013 for Twitter.”
The value has also been boosted by rumors that Apple may be interested in the company.
The last time Twitter was stamped with a price tag was back in July of 2011 for $8 billion, a number batted around during the company’s $800 million round of funding.
Still, tech IPO talk does not sound nearly as sexy as it did a year or so ago. In the last 12 months, the IPOs of Zygna, Groupon and Facebook have become fodder for standup comedians, great examples of hype walking around without any clothes on. Since going public in December of 2011, Zynga has lost three quarters of its value, while Groupon’s price has dropped 81 percent from its opening day price of $20 per share. Though its investors raked in the dough, Facebook has lost 26 percent of its value since hitting the public markets last May.
Twitter’s $11 billion valuation pales in comparison to Facebook’s $100 billion valuation, yet Wolff contends that Twitter’s worth today looks better than Facebook looked on its IPO price.
Yet Greencrest has gotten caught up in its own hype before. In an executive summary eight months ahead of Zynga’s IPO, the analyst firm predicted the gaming company had “extraordinary value,” predicting the company would be worth $15 million to $20 million in 2011. Yet Zynga actually turned out to be worth $11 billion in 2011, and today is pegged at less than $2 billion.
As investors, Greencrest’s money is naturally where their mouths are. Only time will tell if they’ve learned from the past IPO hype and come down to reality. Like any Kool Aid worth its sauce, it’s always difficult predicting when the vibrations of have settled, and if there are any trailers left.