Aswath Damodaran's Twitter Valuation
Having
learned from the Facebook fiasco, I
expect the bankers and the company to make the Twitter IPO a smoother
offering. That process will of course start with the road show, where they will
package the company like a shiny new present, and unwrap their “offering”
price. I am sure that Goldman’s bankers, working on this deal, are a capable
lot and will price the stock well, with just enough bounce to make those who
receive a share of the initial offering feel special. As I watch the frenzy, I have to remind
myself of two realities. The first is that there will be lots of distractions
(like this one) during the IPO, most designed to take my eye of the ball. The
second is that the bankers have their own agenda, and I cannot make the mistake
of assuming that it matches mine. Watching out for my interests, here is how I
see Twitter: at a $6 billion market cap ($10/share), I think it is a very good
deal, at $10 billion ($17.5/share), I am indifferent to it, and at $20 billion
($35/share), it is a moon shot. Could I be wrong? Of course, but I would rather
be transparently wrong (hence the long blog post detailing every assumption
that I made) than opaquely right. I welcome disagreement (though I would much
appreciate your phrasing it agreeably).
