Should Private Cos. with Large Valuations Have to Disclose Metrics?
May 13, 2015
Did you catch the latest mega financing round for one of the social media darlings?
Their last quarter revenue grew 80% year over year
EBITDA surged 182% year over year generating an impressive 24% EBITDA margin
Their MAU's (monthly active users) eclipsed 300 million
And they are on pace to generate over half a billion dollars in EBITDA this year
Nine months ago the company raised a round at a $30 billion valuation. So what do you think the correct valuation is for this current mega round—$40 billion, $50 billion, or $75 billion? Unfortunately the company is not private but public and subject to the highly critical eyes of analysts and investors who tear apart the financials and disclosures. The company is Twitter (NYSE: TWTR) and the answer to the valuation question is $25 billion and falling (based on recent stock prices).
Would this have happened if Twitter were still private? Josh Burwick, managing partner at Sand Hill East Ventures, thinks not. To read his take on the (unfair) treatment of public companies vs. private late stage startups, click here.