My valuation of Twitter yields a value of $18 per share and assumes that revenues will climb to about $11.5 billion in 2023 (giving Twitter about 5 percent to 5.5 percent of the online advertising market then), that the pre-tax operating margin will increase over time to 25 percent (about 5 percent lower than Facebook but about 5 percent higher than Google) and that a dollar in additional capital invested will generate $1.50 in incremental revenues. To justify the $45 per share, you would need the company to reach much higher. By my calculations, Twitter will have to generate about $32 billion in revenues in 2023, giving it, by my estimate, about 15 percent of the online advertising market in that year.In the other corner is Harvard Business School lecturer Chet Huber, who makes a more bullish case at Forbes.com. He sees Twitter as a disruptive force that has a shot of becoming a dominant ad platform—and hence the $25 billion market valuation.
What Twitter Needs To Do To Justify Its Stock Price
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