Social media site boosted by DST Global's $400m, as value doubles since December and daily traffic triples in a year
Twitter, the microblogging website that lets users tweet messages of 140 characters or less, is now worth $8bn (£4.9bn). The firm's new price tag comes after a $400m investment in the loss-making venture from serial social media investor DST Global. Twitter is now nominally worth about the same as rating agency Moody's, which had revenues of $1.2bn in the first six months of 2011 and is nearly as valuable as Marks & Spencer.
The huge valuation reflects high expectations for the company. Confirming the investment, Twitter also announced that its users now send 200m tweets a day, up from 65m a year ago.
"One year ago, there were approximately 150,000 registered Twitter apps. Now, there are more than one million that connect to Twitter. And our team has grown from 250 people to more than 600 in the past 12 months," said the firm in a blog post.
"We have the opportunity to expand Twitter's reach with a significant round of funding led by the venture firm DST Global, with the participation of several of our existing investors," Twitter said. "We will use these resources to aggressively innovate, hire more great people and invest in international expansion."
The new funds are part of $800m Twitter wants to raise as it grooms its business for a potential initial public offering. DST Global, the investment fund led by Russian billionaire Yuri Milner, also owns stakes in Facebook, online gaming firm Zynga and discount firm Groupon, all of which have plans to go public.
Twitter is believed to be using half the money to buy back shares from employees and backers. The rest of the money will be used to help the San Francisco-based company develop its service as it competes for advertising dollars with larger rivals such as Facebook. Twitter may bring in $150m in advertising this year, according to research firm eMarketer, three times what it made last year. The analyst estimates that Facebook brought in ad revenue of $1.86bn last year.
Twitter's valuation has soared along with its peers as investors chase after the world's top social media companies. At $8bn Twitter's valuation is more than double the valuation it received last December when Silicon Valley investor Kleiner Perkins Caufield & Byers made a $200m investment in the firm. The new money brings Twitter's total investment to just over $1.16bn in four years.
The company also needs cash to build its international business. Twitter has targeted London as its first major office outside the US and has appointed a UK head, Tony Wang, and a UK-based communications staff.
Twitter's new valuation comes as shares in social media companies now going public are attracting frenzied buying. Shares in LinkedIn, the business-based social media firm, skyrocketed more than 80% in their first day of trading. They are trading at more than double their $45 opening price and the firm is valued at $9.5bn.
But not all the new generation of social media firms have fared so well. Pandora, an online music company, priced its shares at $16 apiece and experienced a big bounce up on its first day but is now trading at around $13.
Renren, often called China's Facebook, soared 28.6% on its first day of trading in May, closing at $18 a share, well above its $14 opening price and raising $740m. The shares have subsequently slumped to about $10 as investors worry about lack of profits and the Chinese market.
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Source: http://www.guardian.co.uk/technology/2011/aug/02/twitter-valued-8bn-large-investment
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