Home > Uncategorized > Putting a Price on Twitter

Putting a Price on Twitter


According to a recent report by CNNMoney, Twitter’s biggest investor thinks the company is overvalued. According to this post, he’s right.

Twitter was valued at around $7 billion by private investors in backroom trading, without access to any of Twitter’s financials. Since Twitter is still a private company, they are not required to publish their financial information publically.

The question at the heart of this matter is quite simple: how will Twitter ever turn a profit? It’s a truly brilliant product that has revolutionized communication in a lot of ways. However, the very nature of a tweet is that it is short and sweet. There’s really no room for an advertisement in a Tweet. So how will Twitter profit?

Sure they could sell their user data to marketers. They can try to put ads on their website. But for a company with 200 million users (which may be overstated) it’s hard to see how they can create a sustainable business model by posting 160-character messages.

Twitter is a fun, free tool. But I have a hard time thinking anyone would pay for their services. The smarter business model would have been to allow individual users to have free accounts, but charge business users who use the service for PR and advertising.

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