With an expected IPO next year, a foray into music beginning today and the announcement that Twitter has 200 million monthly users made in December, Twitter’s valuation continues to rise. In a news filled week, Twitter has become the unchallenged news aggregation site for social news. That does not bring with it promises of accuracy, but nobody does breaking news better.
The question for many is whether or not this will translate into a sustainable business model. Eric Jackson of Ironfire Capital believes the answer is a resounding yes. In a video released on Yahoo Finance today, Jackson spoke of Twitter’s “mind share” and pointed out that everybody and everything seems to have a hash tag these days. He explains that every Twitter user is their own programmer, producer, reporter or entertainer. “Your handle, my handle, I think these are the TV channels of the future,” he predicts.
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AOL, Inc. (NYSE:AOL)’s AIM once served as a similar hub for information in a much less wired age but struggled to keep people’s attention much less monetize itself as an aggregation platform. Twitter stepped in and has been running with it quite admirably.
“The chatter is that (Twitter) is going to do $600 million in revenue this year and a billion in revenue next year,” Jackson points out in the video. Given that tech companies, especially fast-growing ones in the social media sector, often see a valuation of 15-20 times revenue, Jackson believes that if Twitter were to go public today 20 times next year’s revenue expectations would not be out of line.
That would amount to a market capitalization exceeding that of Netflix, Inc. (NASDAQ:NFLX) and Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) combined. While that may not amount to Twitter being a good investment or public company, as evidenced by Facebook Inc (NASDAQ:FB)’s IPO, it does make a great start when you see that sort of valuation.
Twitter is everywhere except the NASDAQ board. Mr. Jackson believes that this should be the primary goal of the company before someone shows up and changes the game.