Monday, October 07, 2013

Twitter IPO Valuation by Prof. Aswath Damodaran

Here's an interesting in-depth look at the valuation for Twitter by Aswath Damodaran, Professor of Finance at the Stern School of Business at NYU:
 
 
His bottom line:
... here is how I see Twitter:
 
at a $6 billion market cap ($10/share), I think it is a very good deal,
 
at $10 billion ($17.5/share), I am indifferent to it, and
 
at $20 billion ($35/share), it is a moon shot.
That begs the question of how it would look at $20, $25, $28, $30, and $32 a share. I'll guess that the good professor would say something like "less than attractive, and increasingly less attractive."
 
Personally, I am at least half-hoping that Twitter does something fairly similar to Facebook and falls off by 20% to 40% in the weeks and months after the IPO. I'll be ready. But I'll buy at least a modest amount on opening day, just in case... Twitter may in fact be a true moon shot. I mean, I do expect them to eventually grow into any initial valuation.
 
Meanwhile, I'm rather surprised that Facebook (FB) has been holding onto its $50 price in the face of the "difficulties" in Washington.

-- Jack Krupansky

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