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Closely Held Tech Company Buyer Values Twitter at $10 Billion

Twitter, Inc., has not announced a plan for an initial public offering, but experts assume the social media website will go public in the near term, based on its performance with advertising. One of Twitter's shareholders, however, has just upped its estimate of the service's value by nearly 10 percent.

GSV Capital Corp., an investment fund primarily focusing on secondary market investments in closely held technology corporations, reportedly owns 1.9 million shares of Twitter. In a May 8 filing with the SEC, it estimated that stock to be worth approximately $18.50 a share which, multiplied by the nearly 530 million shares in a fully-diluted share count, brings the total estimated value of Twitter to $9.8 billion.

As the expected Twitter IPO moves ever closer, Twitter continues to gain in estimated market value. In 2011, DST Global Solutions led a round of investments in the company that resulted in an approximate valuation of $8 billion. When a fund managed by BlackRock, Inc., bought up employee stock in January of this year, Twitter was estimated to be worth around $9 billion.

One reason for caution in reports of Twitter’s skyrocketing value is that GSV also stated that Twitter is its largest holding, accounting for as much as 14 percent of its assets. While its estimate of the company’s value was filed with the SEC and can’t be mere guesswork, there are incentives for the firm to have a rosier view than may be warranted.

Founded in 2006, Twitter is reportedly on track to pull in $1 billion in revenue by 2014 through market expansion and the development of new forms of advertising. According to its CEO, the service is not currently concentrating on an IPO. Some experts predict that before any IPO is announced, the company will sell more shares as a closely-held corporation in order to fund additional expansion and to reward its early investors. Neither GSV nor Twitter returned reporters’ calls for comments.

Source: Bloomberg, "Twitter Seen Valued at $10 Billion Based on GSV Holding," Ari Levy and Douglas Macmillan, May 10, 2013

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