Is Twitter Inc (TWTR) Worth $12 Billion?


While the market cap of many tech giants have swelled over the last few years, Twitter’s (NYSE:TWTR) value has plunged to a mere $12 billion. In fact it dipped below the $10 billion mark briefly over the last couple of weeks before a rally at the end of last week. So the queston is, just how much would Twitter be worth in a possible acquisition? Is $12 billion too high or too low?

When you cansider the company’s chief rival Facebook, whose market cap currently sits at more than $290 billion, and is trading at a PE ratio of 79, Twitter Inc (NYSE:TWTR) shares seem cheap. The problem is that Facebook is growing their business while Twitter’s member growth has pretty much been brought to a halt. The underlying assets of the Twitter, however, which now include over 300 million monthly active users on their main social network, along with a growing video product called Periscope, could be worth tens of billions of dollars to the right buyer.

For instance, a Time Warner or Verizon could instantly become a major social media player with an acquistion which likely wouldn’t break the bank. Regardless of the company’s profitability right now, the huge member base of the underlying social network, which should be around for years, even without a growth plan, could be leveraged by any number of companies to their advantage. In our opinion the company is worth closer to $20 billion to the right buyer. Will an offer be made any time soon, or will CEO Jack Dorsey and company continue to try and turn the business around?

The stock increased 11.04% or $1.58 on February 12, hitting $15.89. About 35.70 million shares traded hands or up 33.96% from the average. TWTR has declined 54.51% since July 10, 2015 and is currently downtrending. It has underperformed the S&P500 by 45.64%.

From a total of 29 analysts covering Twitter (NYSE:TWTR) stock, 12 rate it a “Buy”, 2 a “Sell”, and 15 a “Hold”. This means that 41% of the ratings are positive. The highest target price is $56 while the lowest target price is $21.0. The mean of all analyst targets is $33.79 which is 112.65% above today’s ($15.89) stock price. Twitter was the topic of 47 analyst reports since July 23, 2015 according to the firm StockzIntelligence Inc. Mizuho initiated shares on January 13 with a “Neutral” rating. Morgan Stanley maintained shares with a”Underweight” rating and a $22 target share price in their report from an October 28. M Partners maintained TWTR stock in a recent report from November 16 with a “Neutral” rating. Barclays Capital maintained the rating on October 28. Barclays Capital has a “Equal-Weight” rating and a $33 price target on shares. Finally, RBC Capital Markets maintained the stock with a “Sector Perform” rating in a report they issued on an October 28.

The institutional sentiment decreased to 1.07 in Q2 2015. It’s down 0.19, from 1.26 in 2015Q2. The ratio fall, as 102 funds sold all their Twitter Inc shares they owned while 129 reduced their positions. 56 funds bought stakes while 191 increased their total positions. Institutions now own 269.03 million shares which is 10.40% less than the previous share count of 300.24 million in 2015Q2.

Institutional Venture Management Xii Llc holds 100% of its total portfolio in Twitter Inc, equating to 418,115 shares. Rizvi Traverse Management Llc owns 2.80 million shares representing 100% of their total US portfolio. Moreover, Ah Equity Partners Iii L.L.C. has 69.57% of their total portfolio invested in the company, equating to 1,202 shares. The California-based Kpcb Dgf Associates Llc has a total of 28.35% of their portfolio invested in the stock. Bain Capital Venture Investors Llc, a Massachusetts-based fund reported 817,155 shares owned.

Twitter, Inc. is a global platform for public self-expression and conversation in real time. The company has a market cap of $12.04 billion. The Firm offers services and products for users, advertisers, developers and platform and data partners. It currently has negative earnings. Products and services for users enables a way for people to create, distribute and discover content, which enables a user on Twitter to create a tweet and a user to follow other users.