Twitter vs. Facebook: Which Has More Growth Upside?

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Nov. 4 (Bloomberg) -- Twitter Inc. is likely to price its initial public offering above the increased range announced earlier today, two people with knowledge of the matter said. Sarah Frier reports on Bloomberg Television's "Money Moves." (Source: Bloomberg)

Twitter started out being kind of conservative, right?

Then it rains its range.

What does that mean?

They originally topped themselves at a 27% discount to facebook, but then they are more expensive than facebook.

What they are saying here is -- you know, we are just as valuable as a company with five times as many users with a profitable business model.

And more patents, let's not forget.

Is it not a risky bet?

Twitter is saying -- listen, we may not be profitable, but we have so many growth prospects, investors are buying into that.

Twitter says that they can have really high growth margins and you may not see it now, but we are investing in advertising models and spending half the revenue on r&d, telling investors we will get there and investors seemed to be believing the model.

What is the downside if you price too high and have nothing to show quite yet?

It means your stock is going to follow your public.

Twitter has a not -- has a lot weighing on their price right now.

Of course, we saw facebook rise twice in the run-up to their ipo and they priced at a number that was back to buy of his banker euphoria tom above the market did not buy it.

Facebook's stock went down.

A terrible year.

Consumer coverage after a year later.

Let's say that that ipo is consistent with what we have seen in the rice is in the expected range, what does this mean for the other social media sites that are not yet public?

Pinterest just raised a valuation and did not even have a revenue model.

Snap chat, i do not know if you know, it is the one where the photo disappears.

Right.

Yes.

Are we in bubble territory?

And you see an lists with these kind of valuations?

There is a lot of correlation with the bubble era.

People talking about eyeballs and these metrics that were not quite with the accounting principles.

With twitter we are seeing the same thing, not talking about profitability, they are talking about adjusting to not just earnings minus interest times appreciation, it is minus stock compensation, minus what they would spend on infrastructure.

They are picking out the bad stuff and saying -- look at this number.

So.

he appreciate that, we will be very busy friday goes public

This text has been automatically generated. It may not be 100% accurate.

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