Twitter May Finally Have a Business

It expects to reach $1 billion in revenues by 2014

   

According to a report on Bloomberg, Twitter is forecasting that it will reach $1 billion in revenues by 2014. This would certainly be impressive since it looks like the company posted revenue of about $140 million last year. That would mean Twitter is expecting a ramp of about 7x.

How is this possible? Unlike many other top social sites, it looks like Twitter could be an ideal platform for monetizing mobile traffic. Hey, users can only include up to 140 characters in a tweet, and many of them include links.

In other words, users are accustomed to clicking on links while on Twitter. And that’s something advertisers like. It’s measurable and a way to get potential customers to an advertiser’s site.

It’s similar to Google (NASDAQ:GOOG), which has generated a massive business from online ads. In fact, Twitter CEO Dick Costolo was an executive at the search giant. It looks like a he learned a lot while at Google.

When it comes to monetization, Twitter has certainly been a underutilized asset. It took Facebook (NASDAQ:FB) about six years to get to $1 billion in revenues. Zynga (NASDAQ:ZNGA) took five years, and Groupon (NASDAQ:GRPN) needed only four years. Assuming Twitter is right about its forecast, it will have taken eight years.

If Twitter wants to have a strong valuation — and to eventually come public — it’s time to get serious about pursuing a business model. All in all, it may actually have found an approach that could make a big impact on the company.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”, “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/ipo-playbook/twitter-may-finally-have-a-business/.

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