What does T. Rowe Price see in Twitter?
I know I'm late asking this question since the news broke last month, but what does T. Rowe Price (the big, smart, staid mutual fund company based here in Baltimore) see in Twitter that it (reportedly) became a big investor in the company last month?
ZDNet's Larry Dignan asks the same question.
Twitter reportedly pulled in a $100 million round of investment last month, at a $1 billion valuation, according to the Wall Street Journal. But the company doesn't have any real revenues and its executives haven't publicized much of a business plan for their Internet-based messaging service.
Okay, T. Rowe Price: why the Twinterest? I could be wrong, but based on a search of Twitter, I don't even think T. Rowe has any official Twitter user accounts.
Comments
The likely reason is that Twitter is very close to monetization. There are several routes this could take: most think the service will continue to be free for consumers/ end users. Option one: charge API developers for the number of calls their add-on or product makes to Twitter every hour. This is a little complicated, but is an interesting and valid model. Second option: sell archived tweets to major search engines, especially in terms of real-time search updates or even as an aid to optimize search results. I work in this space, and there are a lot of compelling rumors recently from believable sources.
Posted by: TDW | October 26, 2009 10:24 AM
Best guess, TRP believes that there is a lot of cash out there on the sidelines that will buyout Twitter when it does make money.
And you can make more money on a buyout than you could if you owned stock. TRP is betting that the sale price will be more than their investment because hot stuff is usually overvalued and cash is cheap right now. Less than 1% return on money market, so they will be very happy with a 5% return.
Posted by: ecogordo | October 27, 2009 9:05 AM