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BofA/Merrill forecasts strong growth, continued losses for Twitter

  • During an investor call, BofA/Merrill analysts forecast Twitter (TWTR) will post revenue of $628M (+94% Y/Y) in 2013, $966M (+54%) in 2014, and $1.26B (+31%) in 2015. At the same time, they predict the microblogging leader will report an adjusted net loss of $56M this year, and $21M in 2015.
  • If BofA/Merrill's estimates were to pan out, Twitter would be going public at 10x-11x its 2014 sales, based on its IPO price range. For reference, Facebook currently trades at 12.3x 2014E sales.
  • Separately, Hillside's Rory Maher thinks Twitter's new Amplify ad product (ads with embedded video clips that are tied to TV programming) can produce $60M/year in revenue, and that its newly-acquired MoPub mobile ad exchange unit could post $60M-$100M/year in revenue. MoPub's 1H sales only amounted to $6.5M.
  • The estimates follow the launch of Twitter's IPO roadshow (presentation). Bernstein and Susquehanna have each come up with a list of questions for the company in response.
  • Among them: 1) Why is Twitter's ad revenue per engagement dropping? 2) Why did timeline views per MAU drop recently? 3) To what extent is Twitter activity skewed toward power users? 4) Could better organizational tools help Twitter pitch itself as a "real-time personalized digital magazine/newspaper?"
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