Tom McKay

What is a fair value for Twitter's shares? Aswath Damodaran, a professor at New York University, has built a valuation model that assumes Twitter will scoop up around 5.5% of the online ad market by 2023, giving it revenues of $11.2 billion. His model also posits an operating margin of 25% for the company, which seems plausible given that of other internet firms that have grown fast. Based on his analysis, he reckons Twitter's shares are worth $17.84 each. Given the many uncertainties that still dog the company's business model, a price of around $18 a share seems reasonable. So based upon the new range of $23-$25 the shares are now starting to look very expensive. (VIEW LINK)


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