• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

The 'Unbelievable' Revenue Growth Trajectory To Justify Twitter's Price

Tyler Durden's picture


Dismissing for one moment the fact that TWTR for all intent and purpose is now trading red for ($43 handle) for most if not all 'retail' investors unallocated at the IPO, Aswath Damodaran, valuation guru from NYU has taken his spreadsheet of doom to the analysts' forecasts for the dot-com-mania poster boy. As the following chart shows, the 140-character platform will have to generate $32 billion in 2023 to be worth $45 per share - that is a 50-fold increase in revenues over the next decade to justify it's IPO-busting current price.


"Twitter is a good company, with the potential to be a great one," he said, but as Bloomber reports, he adds, "but not a good investment," as based on his calculations, TWTR is worth $18 (31% less than its IPO price).

It seems the market is getting it...



Chart: Bloomberg

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Fri, 11/08/2013 - 10:57 | 4135179 onewayticket2
onewayticket2's picture

i think these projections include "intangible" revenue.

hey, it works for the feds...why not twitter.

Fri, 11/08/2013 - 11:29 | 4135307 SafelyGraze
SafelyGraze's picture

the point of the article is:

btfd for tesla!

Fri, 11/08/2013 - 12:01 | 4135410 TeMpTeK
TeMpTeK's picture


Fri, 11/08/2013 - 12:07 | 4135435 Evil Peanut
Evil Peanut's picture

The bandwagon will crash... There is no money to be made here.

Fri, 11/08/2013 - 10:58 | 4135180 AlaricBalth
AlaricBalth's picture

Shouldn't that chart say TWTR, not TSLA? 

Generally speaking, it's all the same pump and dump BS to me as well.

Fri, 11/08/2013 - 11:06 | 4135220 pods
pods's picture

Exponential functions work really well in the real world.


Fri, 11/08/2013 - 11:20 | 4135285 Vegamma
Vegamma's picture

Valuations are highly dependent on the discount rate The risk free rate is negative (US1 CDS > UST1 yield). A negative divided by a negative is a positive. Why is it so hard for people to adjust to the brave new world we live in?

Fri, 11/08/2013 - 12:10 | 4135417 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

No the are incomplete. They represent only one inflection point moving towards the change in concavity in the curve without including the point where the concavity changes. It is one of the main reasons the derviative and integral of e^x is e^x and the reason the limit e^x as it approaches inf. is inf. while the limit of e^x as it approaches 0 is 0. If it included the concavity point the limit would solve to a real number.

They work very well in the real world they just don't describe the whole cycle only a subsection of it. Therefore their predictive power is limited to the subsection they do describe.

Fri, 11/08/2013 - 12:58 | 4135622 Kirk2NCC1701
Kirk2NCC1701's picture

@Capitalist: "Perfect correlation with US money supply."

+1.  You nailed it.  Which is why the Fed & Friends are happy to promote ANYTHING that increases the use of its fiat or 'money' (currency!) supply. 

Hell, in spite of hypocritical objections to the contrary, they need, want and love the use of USDs in offshore Vice (drugs, human trafficking, etc), and Caribbean banks using "dirty" or "gray" money (untaxed cash) to buy US Debt.  The false_front/red_herring 'argument' of cracking down on money laundering is only a pretext to exert more US dominance over Sovereign countries.  Don't confuse Reason with Pretext.

Fri, 11/08/2013 - 10:46 | 4135115 Bosch
Bosch's picture

This is doable, I mean people are still using AOL. 

Fri, 11/08/2013 - 10:49 | 4135125 yogibear
yogibear's picture

Pump, pump it up. IPO fever right now.

Any IPO, top bid right now.

Fri, 11/08/2013 - 10:50 | 4135132 EscapeKey
EscapeKey's picture

#Twitter #Awesome #Billionaire Twitter is simply awesome. It's one of those companies, which either you "get" or you don't. And sadly, in thi

Fri, 11/08/2013 - 11:44 | 4135354 walküre
walküre's picture

Things you either get or you don't - Bitcoin

Bitcoin ATMs manufactured by a company in Las Vegas.

Full circle. Wall Street - Casino - Wall Street (hint: still a casino)

Fri, 11/08/2013 - 11:44 | 4135358 OneFortySeven
OneFortySeven's picture

I see what you did there. I like it.

Fri, 11/08/2013 - 10:50 | 4135140 Rehab Willie
Rehab Willie's picture

I can't wait for those "This tweet is brought to you by" ads to start showing up on my phone.

Fri, 11/08/2013 - 10:51 | 4135147 mickeyman
mickeyman's picture

Does that mean revenue will be bigger negative numbers?

Fri, 11/08/2013 - 10:55 | 4135166 BurningFuld
BurningFuld's picture

Isn't this like IPO'ing "The Phone Call"?

Fri, 11/08/2013 - 10:59 | 4135186 Randoom Thought
Randoom Thought's picture

Yes, but only if at the same time you were listening to the other person, there was a continuous stream of advertising in the background that you could try to tune out, but had to listen to.

Come on, don't you realize that a lot of Wall Street, government and insider money has gone into making people post their every thought into a permanent data base and those people who created it need to be rewarded with vast sums of money for supporting the elitist fascist state?

Its is how insiders, elitists and cronies get all of their money. You wouldn't expect them to actually work or produce anything now, would you?

Fri, 11/08/2013 - 10:55 | 4135168 Randoom Thought
Randoom Thought's picture

Gosh you guys are Soooo dense, Didn't you learn in 1999 that clicks are more immportant than dollars. Revenue and income don't matter, only clicks and eyeballs.

You need to go back to criminal propagandist MoMo school.

Fri, 11/08/2013 - 13:15 | 4135444 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

When each of those clicks generate dollars because that is how the advertising revenue model works and the idea of real estate where location is everything so the more clicks....... Mind you it doesn't guarantee a profit.

Fri, 11/08/2013 - 10:56 | 4135173 Iam Yue2
Iam Yue2's picture

I am reminded of the flotation of Betfair, the betting exchange that was said
To be going to revolutionise the world of betting, in the process killing of the traditional bookmaker. it didn't; but the euphoria that surrounded the flotation saw many a poor sheeple being left with burnt fingers.

The flotation, in the so called disruptive upstart, went smoothly, with shares in the company opening at a price of £13.00, which valued the company at £1.390bn.

Within half an hour of trading, shares in Betfair were changing hands at £15.50, and during the course of the day they recorded an intra-day high of £16.09, before closing back at £15.50.

Today they are south of £10 and those old bookmakers are alive and kicking.

Fri, 11/08/2013 - 11:02 | 4135197 Pig Circus
Pig Circus's picture

I signed up about four years ago. Signed in an messed around for a couple of weeks. Realized it just wasted my time. Signed in about 3 times since not sure why. They could close my account tomorrow and couldn't care less. But I guess that's just me.

Fri, 11/08/2013 - 11:46 | 4135361 walküre
walküre's picture

I get email invites to join by people I don't care to connect with.

Fri, 11/08/2013 - 11:14 | 4135205 LeisureSmith
LeisureSmith's picture

Twitter is juicing for the noblest of reasons. To look bigger, better and more attractive than they really are. BEEFCAKE!!

Fri, 11/08/2013 - 11:10 | 4135226 GMadScientist
GMadScientist's picture

We have collected four times as many pennies and lira as last year.

And here's a random chart of Tesla, because we like kickin' em when they're down.

Fri, 11/08/2013 - 11:19 | 4135275 Buffalo Bones
Buffalo Bones's picture

Buy Shitter: because fuck you, that's why.

Fri, 11/08/2013 - 22:39 | 4137606 Golden Showers
Golden Showers's picture

Oh, Twatter, t'wat twits twiddle tweet tattles to thee?

Whore of Babylon! I always thought a Twitter was a Shitter, and a Tweeter was like someone inside that big blue/green plastic crap locker. BB, you have made my day. Thank you for sorting this out. I'll buy this shit stock, because I'll buy ANY fucking thing.

For the rest of you goobers, your homework assignment is to go out and tip over every portable toilet you can find this weekend. You have 36 hours. Your mission will be challenging: first you have to rock the thing back and forth until you can get it off balance. Here's a tip: rock it from the outside, not the inside. Don't be a Tweeter. If you encounter a Tweeter, make god damn sure it does not get out.

Of course, should you accept your mission, I am not giving you investment advice. I am not telling you what to do. Be sure to consult a professional investment advisor before proceeding to throw your money or your shoulder into the toilet. I can give you my opinion, however, that this is the American thing to do. So when you goob folks out there see a shitter: goob for the glory, for your country. Goob for broke. Goob for the home team.

Together, we can make a shitter twitter. We can make a twittier, shittier tomorrow for everyone.

Fri, 11/08/2013 - 11:20 | 4135286 LongPAU
LongPAU's picture

Freudian TSLA wharrgarbll.

Fri, 11/08/2013 - 11:30 | 4135309 Downtoolong
Downtoolong's picture

TWTR is worth $18 (31% less than its IPO price).

If that happens, maybe Twitter can sell its logo rights and become the latest character addition to Angry Birds.

Fri, 11/08/2013 - 11:51 | 4135331 ptoemmes
ptoemmes's picture

The end of the world - or at least capitalism as we now know it - is supposed to collapse somewhere in that time period.  Nary a glitch...ahh non linear math.

Fri, 11/08/2013 - 12:02 | 4135418 Diplodicus Rex
Diplodicus Rex's picture

"the 140-character platform will have to generate $32 billion in 2023 to be worth $45 per share"

Is that in nominal $ or in today's $? If nominal then it shoudl be quite easy. The $ in 2023 won't be worth the linen on which its printed.

Fri, 11/08/2013 - 12:16 | 4135477 RaceToTheBottom
RaceToTheBottom's picture

Hockey sticks.  Ride them up, Muppets!!!

Fri, 11/08/2013 - 13:02 | 4135646 esum
esum's picture

microblogging site for rev/profit generation... really

Fri, 11/08/2013 - 13:04 | 4135650 Kirk2NCC1701
Kirk2NCC1701's picture

One way or another, all the Twitter Twits will "pay" for the stock price -- when the Data mining kicks into high gear:  Twitter meet FB, meet Google, meet MSN, meet Yahoo, meet Amazon, meet eBay.  All (Twitter, FB, Google, MSN, Yahoo, Amazon, eBay), meet the NSA, DHS and IRS.  Shake hands, play nice.  /s

Fri, 11/08/2013 - 13:12 | 4135673 Kirk2NCC1701
Kirk2NCC1701's picture

The older generation (>40 or >50) might be willing to do w/o the Instant Gratification of iToys, but the young ones are screwed:  They've been practically hard-wired to 'want' to be connected to the Borg Hive-mind for large parts of the day, via their Gaming, smart-phones, etc.  In 10-20 years the Skynet Collective will be embedded into every key aspect of people's lives.  Maybe sooner (5-10).

"One Ring to rule them all." comes to mind.

Fri, 11/08/2013 - 14:18 | 4135927 kevinearick
kevinearick's picture

peanuts for the kleptos, but what is the resulting negative leverage, and what is the momentum of these IPOs?

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