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Google and Facebook have held low level talks with Twitter over a possible sale. The move values the micro-blogging site at around $10 billion (£6.2 billion).
Early suggestions are that little other than the valuation of Twitter has actually been discussed, which is believed to be in the region of $8 – $10 billion according to the Wall Street Journal. That’s more than double the $3.7 billion price tag reported a year ago!
Why the jump in valuation? Well, despite having estimated revenues of $45 million, Twitter actually lost money last year due to the hiring of new data centres. This year they are estimated to more than double their revenue to $100 – 110 million. In the last year or so, valuations have skyrocketed in online properties, not least in the social media market; this has been caused by the eagerness of investors to in the latest internet companies, Twitter being a great example.
Facebook itself is valued at a staggering $50 billion, thanks to a recent round of investment [see: Facebook Overvalued at $50 Billion in Investor Poll | Bloomberg]. With information being power, Google, Facebook and, to a lesser extent, Twitter are in extremely strong positions. This, along with the huge (potential) returns have made them extremely attractive property to investors.
So what do Google or Facebook want with Twitter? Well, 175 million users and 95 million tweets a day…all for the wee sum of around $10 billion. Google and Facebook are no strangers here either; they’ve held talks before about acquiring Twitter, with Facebook offering $500 million back in 2008. Again, a great indication of how the market has soared.
So who needs it more? Well, from a purely functional point of view, you could argue that Google need this more because of their appalling track record with social media. Ever heard of Buzz? If you have the chances are that it’s because you’re working within circles that need to know. Outside the world of the online-savvy, Google’s social record is minimal.
With Facebook becoming the most visited site of 2010 [See: Facebook Overhaul Google as the Most Popular Site of 2010] Google are having to step up their game in what is becoming an incredibly social orientated internet. This would give them some weight with a platform that could well be a fusion of search and social services. Twitter know they offer a service that fits in between Google and Facebook services, and so I’m sure they are happy to ride this out for the time being. With a doubling of their valuation and healthy revenues for next year, they’re in a pretty good negotiating position.