S&P Capital IQ Equity Research Issues Twitter Pre-IPO Report
Projects substantial revenue growth but operating profitability not expected through 2014
PR Newswire

NEW YORK, Oct. 30, 2013 /PRNewswire/ -- As the much-awaited IPO of Twitter fast approaches on or about November 7, S&P Capital IQ Equity Research has issued a special 16-page pre-IPO report.

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"We project substantial revenue growth for Twitter over the next few years," said Scott Kessler, Head of Technology Sector Equity Research and Internet Equity Analyst at S&P Capital IQ.  "Based on our estimates, we calculate a compound annual growth rate for revenue of 97% from 2013 to 2015, driven largely by the advertising business, as the company focuses on monetization and seizes upon international opportunities.  However, Twitter has been losing money, and we do not foresee operating profitability until 2015," continued Mr. Kessler, who authored the report. 

Without earnings, Mr. Kessler believes an appropriate way to value Twitter is relative price-to-sales and price-to-sales-to-growth analysis.  As part of the report, he assembled a peer group of 10 publicly traded high-growth technology, Internet, and social media companies.  His analysis yields a valuation of $11.3 billion to $13.7 billion, which is below where Twitter valued itself last month, and below the contemplated IPO valuation, based on the initial price range indicated by the company. 

Mr. Kessler's valuation assessment reflects the considerable risks he sees related to some confusion about Twitter's offerings and their appeal, a number of larger and comparably positioned competitors, indications of decelerating growth in users and engagement, significant operating and net losses he sees through 2014, and his view that Twitter has somewhat lacking corporate governance.

Mr. Kessler will be participating in a conference call on his assessment of Twitter on November 4 at 11 am ET, followed by a live Twitter Chat.   Information on these events can be obtained by clicking on the following link.     http://bit.ly/17sGd3u

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