I am no 'Wizard of Wall Street.'
I bought Microsoft just before the anti-trust decision crushed the price.
I am heavily invested in Blackberry.
I am taking a beating with Soda Stream.
I don't work at a hedge fund.
I barely understand what they do.
So when I read in the Wall Street Journal that Twitter was valued at "$39 billion and possibly $49 billion," I was at a loss.
I mean, the Wall Street Journal must know what they are talking about, right?
So someone please explain this to me.
$49 billion is a LOT of money!
Delta Airlines is valued at $37 billion -- a lot less than Twitter.
Delta is a business I can understand. I fly in their planes. I buy a ticket. I get on in one city and I get off in another.
Delta has planes.
Twitter has... tweets.
Twitter brought in $350 million in 2012, with 500 million Twitter users in the same year. (In that year, Twitter was valued at a measly $10 billion). But let's look at Twitter objectively (for a change). $350 million in revenue from 500 million users. That means that Twitter was able to extract an astonishing 70¢ per user per year -- 70 cents per year! The homeless person on my corner does better than this.
Another way of looking at this: Twitter earned $0.0019 per user per day.
There are an estimated 500 million tweets sent per day which means that on a per-tweet basis, Twitter is earning an astonishing (can you even do the math here? -- $0.0019 divided by 500 million) $0.000000000004 per tweet.
Is this a business?
Can someone please explain to me how this translates to $59 billion in value?