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Twitter: 140 Characters at $1 Million Apiece

By Tim Beyers – Updated Apr 6, 2017 at 1:33AM

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The microblogger's 2010 revenue projections aren't as outlandish as you think.

Hear that, Fool? It's the sound of Web watchers hyperventilating at the news that Twitter expects $140 million in 2010 revenue, up from zero dollars today.

Fiery adjectives punctuate most of the mainstream coverage -- particularly "crazy" and "impossible." But is it? Is Twitter just another loser-in-the-making with an Underpants-Gnome business model?

Only if you assume the company has no plan to make money. But that would be stupid. Proven investors such as Benchmark Capital's Bill Gurley don't place multimillion-dollar bets on companies that have no idea how they'll make money. He and his partners surely must be privy to a plan.

In fact, there are plenty of ways for Twitter to make money. Still my favorite option: a permissions-driven supplier of microtargeting data. Any company that recommends products, services, or entertainment could benefit from the conversational intelligence that Twitter provides. Netflix (NASDAQ:NFLX) and Amazon.com (NASDAQ:AMZN) spring to mind immediately, but hundreds of other businesses could also benefit. (Interesting tidbit: Amazon's Jeff Bezos is also invested in Twitter.)

At the very least, Twitter could help shape advertising strategies on other platforms -- a service similar to what Akamai (NASDAQ:AKAM) offers right now. Google (NASDAQ:GOOG) and Facebook already know this. Both companies have tried and failed to acquire Twitter.

Some observers fret about that hefty $140 million figure, quite understandably. Twitter feels like a classic Underpants Gnome business. There's just one problem: The company is already blowing past its own projections.

Leaked documents show that Twitter insiders were expecting 25 million users and $4.4 million in revenue by the end of this year. Researcher comScore says that Twitter attracted 37.3 million unique visitors in May alone.

By the end of next year, Twitter expects 100 million regular users. And it expects those users to help drive $140 million in revenue, meaning that each one will account for $1.40 in annual sales. Not bad, but we're already seeing better. Look at Facebook. The king of social networks now sports 250 million users worldwide, and it's on track to produce more than $500 million in 2009 revenue -- at least $2 per user -- according to Netscape co-founder Marc Andreesen, who sits on Facebook's board of directors.

Also like Facebook, Twitter has become a platform upon which businesses are being built and funded. News Corp.'s (NYSE:NWS) MySpace failed in this area, and it's losing ground to its principal rivals as a result.

Think about that for a minute. Twitter is better-positioned than MySpace. It's also well-funded, and it provides a service that more than 37 million people find valuable.

Maybe that's not enough to produce $140 million in 2010 revenue. But in tech, rebels tend to win often, and in very big ways. Twitter is as well-armed a rebel as I've seen.

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Amazon and Netflix are Stock Advisor selections. Akamai and Google are Rule Breakers recommendations. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers wonders whether Twitter is playing a joke on us -- $140 million, 140 characters. Coincidence? Hmmmm. Tim had stock and options positions in Google and a stock position in Akamai 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 was tossing and tweeting in bed last night.

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