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$10 billion valuation for Twitter justified? Thursday, 10th February 2011
A report by the Wall Street Journal will silence any sceptics of the micro-blogging site Twitter as valuations hit the $10 billion mark.
With user numbers surging in the past two years, both Facebook and Google have been holding talks with Twitter founders, their sights set on the acquisition of the messaging service. What's more, if the reports are anything to go by, Twitter will be holding tight for the time being.
The reception from Silicon Valley is that the figures are far from an accurate reflection of the website's tangible value. But in a week that has seen the Huffington Post sold to AOL for $315 million, it is unsurprising that executives at Facebook and Google are keen to acquire the rapidly expanding social network site. Limited to 140 characters a tweet, Twitter has remained the most elusive of the social networking sites. Statistics from 2009 show that up to 40% of the content shared through Twitter could be categorised as 'Pointless Babble'. But Ethan Kurzweil of venture capital firm Bessemer Venture Partners states, "these start-ups are building social services and have lots of data about their users, which is something the market highly values at the moment."
The $10 billion figure may sound optimistic for a company whose 2010 revenue was $45 million. But for companies such as Facebook, who reached the same valuation back in 2009 to similar scepticism, it is their recognition of Twitter's viral potential that makes it so valuable.