Magazine article Newsweek

Two Numbers: Twitter's Dicey 2013

Magazine article Newsweek

Two Numbers: Twitter's Dicey 2013

Article excerpt

Byline: Anna Bernasek

After all the hype surrounding Twitter's IPO last fall, the social media service reported a disappointing end to 2013. As growth in the number of users both in the U.S. and around the world tapered off, surprised investors sold the stock down 24 percent the first day after its earnings were released. Yet even after the recent price correction, Twitter stock has a sky-high valuation.

In the last three months of 2013 Twitter roughly broke even. The company reported a huge loss of $511 million, but excluding onetime stock costs associated with its IPO Twitter made a modest profit of $10 million. That's small potatoes compared to its stock market value, which is in the neighborhood of $27 billion. If profits stay where they are, it would take nearly 700 years to pay back an investment in Twitter stock from company earnings.

To put that in perspective, look at Google, a bigger and more established web giant. …

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