Twitter Inc (NYSE:TWTR) And Its Valuations story
Twitter Inc (NASDAQ:TWTR) news is still buzzing with its valuations tangle. However, one good thing about Twitter is that it is not allowing it to be flustered but is concentrating on its business.
Business as Usual
It appears that Twitter has put its valuations tangle behind it and is not allowing it to affect its operations. It is busy doing what it does best and that is deliver relevant content to its users, allow them to stay in touch and delivering results to its revenue generators – the advertisers. It has recently updated its visuals giving it the feel of the apps. Users can now personalize the profile and add more colors. Icons have also been updated; the navigation bar has a different color and style. The complete upgrade is still some time away as Twitter Inc (NYSE:TWTR) is beta testing the update. As it is visual only, it may not lead to any major issues.
The company is expected to declare $217 million for 4Q2013 in early February but still post operating loss of $17.4 million. The expected revenues will be almost double than those posted for the previous quarter. Profitability is expected only in 2015. Twitter, like other social media platforms derives revenues from ads posted on its sites. The trend of smartphone usage has been exploited very well by the company as it now derives 70% of its ad revenues from the mobile platform. It is also looking at expanding its footprint outside the U.S. Though 77% of the users are not Americans, it still gets only 26% of its revenues from outside America. Facebook has more than 1 billion users against Twitter’s 230 million.
The Valuations Game:
It is precisely these figures that are posing issues to the analysts. Traditional metrics cannot work in such a scenario, you cannot even compare it with Facebook Inc (NASDAQ:FB). They are divided among very broad lines with the highest price target of $70 and the lowest one of $20. Though there are 11 analysts with a ‘sell’ recommendation, six brokers still rate it a ‘buy’. Even the underwriters to the IPO are divided; Goldman Sachs raised its price target to $65 from $46, while Morgan Stanley has put a ‘sell’ rating. It appears to be more of a wait and watch game as the picture will get a bit more clear on February 5, 2014 when Twitter Inc (NYSE:TWTR) declares its first public figures.
Twitter is also not helping the analysts; it has not come out with any teasers in terms of any definite numbers.