FEARS that a second dotcom bubble is rising grew yesterday, with Google and Facebook both understood to be in talks to buy Twitter for up to $10bn (£6.23bn).
The Silicon Valley giants are in “very speculative” negotiations to take control of the hugely popular microblogging site for a valuation of between $8-10bn, according to people close to the deal.
In its recent financing round, Twitter was valued at $3.7bn, after selling $200m worth of shares. The site has 175m registered users who send 95m “tweets” of up to 140 characters every day.
The talks follow the rejection of a $6bn Google bid for online deal site Groupon in December.
LinkedIn, the professional networking site, is expected to reach a valuation of around $2bn after filing plans for an IPO. And Facebook has been valued at a staggering $50bn after Goldman placed a number of its privately held shares. Facebook brought in revenues of around $2bn last year.
Ian Maude of Enders Analysis told City A.M.: “It looks like March madness has come early. There have been a number of pretty crazy valuations recently but this one wins the prize.
“Facebook has a high valuation but it has a much deeper relationship with its customers than Twitter does. There may be ways to better monetise the service but $10bn is astronomical.”
But Nic Brisbourne, an investment manager for DFJ Esprit, said: “It’s a big multiple, but they are clearly not looking at Twitter on a multiple basis.
“Google bought YouTube for $1.65bn on revenues of virtually zero.
“It looked at the market and decided that was an important sector to control. It could apply the same logic to Twitter. It is a fantastic service – any valuation is going to be based on where the market is at and the market is very frothy right now.”