Is Twitter Really Worth $10 Billion? - WSJ.com: " . . . Companies love touting themselves as "platforms," but in Twitter's case it happens to be true. The company must spend to maintain its plumbing and constantly improve its interface, but once that's done, it stands back and collects its middleman money. That means getting to massive scale at relatively minimal cost. Twitter won't divulge figures, but people in the venture community, including some Twitter backers, say its margins are as high as 30% to 40%. For simplicity's sake, let's reduce Twitter's net margins to Google's, which are a gusher-like 21%. Value all those earnings at Google's 17-times-trading multiple, and, voilà, Twitter has a value of $12.5 billion. And you needn't tweak conditions much to get a higher number. What could go wrong? The major worry is international growth. Advertisers may also have a natural limit on their Twitter spending. Unlike many users of Google or even Pinterest, Twitter users aren't browsing with a clear intent to purchase. And then there is Twitter fatigue, in which users may feel deluged by information. The company will have to invest to prevent this. Late-stage venture investing "is the hardest time to think about a company," adds Rick Heitzmann of FirstMark Capital, an investor in Pinterest, which just earned its own $2.5 billion valuation with zero revenue. "You're in between. It's not small enough to be completely speculative and not broad enough to know growth rates or earnings margins. . . ."