BusinessTechnology Now

Twitter valuation rising, gets first buy rating ahead of IPO

Media IndustryTwitter, Inc.Initial Public OfferingsFinancing and Stock OfferingsOrganized Crime

SAN FRANCISCO -- In some ways, it would seem a tough sell: After seven years, Twitter still isn't profitable and it doesn't seem like it will be any time soon. It has just begun to ramp up its advertising business, which will require substantial investments, especially overseas. And the growth of new users on the service, which doesn't have the same kind of mainstream appeal as Facebook, is slowing.

Yet, Ironfire Capital and Gamco Investors are already saying the company could be worth $15 billion to $20 billion when it begins trading. And some fund managers are still interested in buying into the hotly anticipated initial public offering. They are banking that Twitter will quickly grow its revenue as it expands overseas.

"The valuation is fair despite the lack of quantifiable profit," Jeffrey Sica, who helps oversee more than $1 billion of assets as the president of Sica Wealth Management in Morristown, N.J., told Bloomberg News. "I anticipate the revenue to grow exponentially as retailers and media begin to explore ways to attract new customers through the use of Twitter."

And even though the stock has yet to start trading, it already has its first "buy" rating from Robert Beck, an analyst with SunTrust Banks. He expects Twitter to float at $28 to $30 a share, and said it could reach $50 within a year. Twitter has not said how many shares will be sold or for how much.

Over the weekend, Twitter Chief Executive Dick Costolo made waves when he weighed in on the shortage of women on Twitter's executive team and on its board of directors.

Costolo, a former improv comedian known for his dry wit and pithy tweets, posted a comment in response to a New York Times article on the subject, which noted that only one woman, its new general counsel Vijaya Gadde, is listed as an executive officer in Twitter's filing for an IPO.

(All Things D's Kara Swisher was the first to question the lack of women in Twitter's top ranks).

Costolo challenged this remark made by Vivek Wadhwa, a fellow at Stanford's Rock Center for Corporate Governance who is writing a book on women in tech: "This is the elite arrogance of the Silicon Valley mafia, the Twitter mafia," Wadhwa was quoted as saying. "It's the same male chauvinistic thinking. The fact that they went to the IPO without a single woman on the board, how dare they?"

Costolo called Wadhwa: "the Carrot Top of academic sources."

He later said Wadhwa had a "propensity for silly hyperbole."

A Twitter exchange between the two ensued.

In a post on TechCrunch, Wadhwa called on Twitter to lead in bringing diversity to Silicon Valley. He said Costolo in his comments on Twitter "continued to hit below the belt rather than address the problem." He also called Silicon Valley a men’s club that "stacks the deck against women."

ALSO:

Twitter makes public its secret IPO filing

Twitter faces new pressure to boost global ad revenue

Twitter IPO hurdle: The service is well known but not widely used

Copyright © 2014, Los Angeles Times
Comments
Loading