Twitter's debut was met with exultation as jubilant investors bid the social-media microblogging site from its original IPO price of $26 per share to over $50 per share. Although the company's price has subsequently dropped, it appears the valuation is still expensive.
Twitter appears to be trapped in a classic "love the business, hate the price" situation: According to a recent Forbes article, the market values each Twitter monthly active user more than a Facebook or LinkedIn user although Twitter users provide less revenue.
However, Twitter isn't resting on its laurels. It has interesting prospects for user monetization including TV, news, and e-commerce.
Twitter CEO, Dick Costolo, has an ambitious goal of transforming Twitter into a "second TV screen" to provide over $1 billion of revenue by 2014. The recent hire of Vivian Schiller will bolster Twitter's news coverage going forward. Finally, the partnership with Starbucks with its "Tweet-a-coffee" campaign is a glimpse into how Twitter can enter the e-commerce market.
Unfortunately, those things are in the nascent phases and don't appear to be able to sustain the company's current market capitalization.
In the video, Jamal Carnette discusses Twitter's current valuation with Evan Niu, CFA.
Wary of Twitter at this price? Learn about this social-media company
This incredible tech stock is growing twice as fast as Google and Facebook, and more than three times as fast as Amazon.com and Apple. Watch our jaw-dropping investor alert video today to find out why The Motley Fool's chief technology officer is putting $117,238 of his own money on the table, and why he's so confident this will be a huge winner in 2013 and beyond. Just click here to watch!
The article Is Twitter Already Overpriced? originally appeared on Fool.com.
Evan Niu, CFA has no position in any stocks mentioned. Jamal Carnette has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.