Covestor portfolio manager Barry Randall shared his thoughts on Twitter’s IPO filing with eCommerce Times:
Barry Randall, Covestor model manager, pointed to PrivCo statistics that show Twitter generated $245 million in revenue in 2012. “Assuming 40 percent growth, that should lead to $343 million in 2013… If Twitter is already profitable, then a post-IPO valuation of roughly 12x revenue will give the company a market capitalization of over $4 billion.”
For a lot of people, “Twitter — like Facebook — effectively is the Internet, a kind of walled garden in which people are content to stay, getting news, sharing information and making plans,” Randall added. “With such ‘sticky’ customers, a valuation of $4 billion could look like a bargain.”
While some in the investment community are worried that the scanty disclosure now will lead to unpleasant surprises, Randall isn’t concerned. “There will be plenty of time before the actual day of the IPO for investors to learn enough to decide whether to participate,” he said.
“It will be interesting to me, however, to read Twitter’s S-1 filing document to learn who Twitter views as its competition,” Randall added. “There really isn’t anyone else like them, and they are something of a natural monopoly, at least in their pure microblogging form.”
Read Barry’s writing on tech stocks and check out the Crabtree Technology portfolio.
