Profit Elusive, but Twitter Gets $3.7 Billion Value
By AMIR EFRATI
The value of Twitter Inc., the website that allows users to send 140-character messages called "tweets," has nearly quadrupled in the past year, according to a new investment made in the San Francisco start-up.
Twitter said Wednesday it raised a round of funding that valued it at $3.7 billion, becoming the latest young Web company in which private investors put a multibillion-dollar worth on the operation.
The rich valuation comes despite the fact Twitter is still working on ways to translate its more than 175 million registered users into a profitable business.
"There's no question that price is well ahead of any analysis of Twitter's business today," said Josh Hannah, a partner at venture firm Matrix Partners
While the three-year-old company has been slowly incorporating advertising into its service it hasn't hit upon a formula as lucrative as the models of Google Inc. and Facebook Inc., among others, analysts say.
Twitter will draw just under $50 million in ad revenue in 2010, according to research firm eMarketer. That figure doesn't include fees Twitter receives annually from Google and Microsoft Corp. to show tweets to users of their search engines. People familiar with the matter say Twitter earns millions of dollars a year from such fees.
The new $200 million investment was led by venture capital firm Kleiner Perkins Caufield & Byers of Menlo Park, Calif., a Twitter spokesman said. The company, which has some 350 employees, has now raised about $360 million from venture firms including Benchmark Capital and Union Square Ventures. So far, the company has indicated no plans to sell stock publicly.
Twitter Chief Executive Dick CostoloTwitter's new valuation is a significant jump from its $1 billion level last fall during a prior round of financing, according to people familiar with the situation.
But it isn't out of line with the valuations placed on some other young and buzz-generating Web start-ups.
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