Is This the Market's Next Bubble Boy?

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Twitter, the social-media darling that skeptics say possesses an underpants gnome business model (Phase 1. Collect underpants. Phase 2. ? Phase 3. Profit!) is raising a new round of financing at a $1 billion valuation, TechCrunch reports.

Citing multiple sources, TechCrunch's Michael Arrington says that Twitter will receive at least $50 million from venture investors, including New York's Insight Venture Partners (IVP). CEO Evan Williams told employees the news at a recent all-hands meeting, Arrington wrote.

Investors may be familiar with Insight, which backed Photobucket before it was sold to News Corp. (Nasdaq: NWS  ) in 2007. IVP's other investments include DivX (Nasdaq: DIVX  ) and Parallels, a maker of popular virtualization software for Mac OS X.

Let's give the skeptics their due. Twitter has been growing massively, sure, but security and uptime issues have left many of us wondering when Google (Nasdaq: GOOG  ) would rescue Twitter from itself.

Facebook, meanwhile, is still the king of all social media, with 300 million registered users worldwide. But don't count out Twitter too quickly. Here in the U.S., the numbers are probably closer than you think. Twitter served 21.2 million unique visitors in August; Facebook served 87.7 million.

And while TechCrunch deserves kudos for this latest scoop -- if it does, indeed, prove accurate (earlier reports of Apple (Nasdaq: AAPL  ) pursuing Twitter were incorrect) -- I went on record in February saying Twitter could command a $1 billion valuation. Businesses built to profit from personal data, such as Amazon (Nasdaq: AMZN  ) and Netflix (Nasdaq: NFLX  ) , would line up to buy data services from Twitter, I wrote at the time.

Whether IVP and other investors are buying into my thesis today isn't clear. But I'm sticking with it. To me, Twitter was always going to be a billion-dollar business; it's just reached it sooner than I (and perhaps any of us) expected.

What do you make of this latest news? Let us know in the comments box below.

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Fool contributor Tim Beyers had stock and options positions in Apple and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy won't tweet with twits. Sorry.

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