VentureBeat

(Red notes a base-case scenario and blue represents upside.)

Twitter shares might be worth between $19 and $26, giving the company a valuation of up to $589 million, according to NeXt Up! research. The report is part of SharesPost, a private equity market allowing buyers and sellers to exchange shares of pre-IPO companies. NeXt Up! is a research firm co-founded by Michael Moe, a former senior managing director and director of global growth research at Merrill Lynch. The report is available here.

The research firm arrived at the valuation by the multiplying estimated annual revenues of about $134 million in 2013 by projected profit margins of 25 percent and a market multiple of 25 discounted back three years.

Putting in Twitter’s estimated net cash position of $40 million, they get the $589 million figure. In a bear case, where the company makes only $100 million in 2013, that valuation would fall back to $503 million with net cash. Both the bull and bear revenue projections fall far short of the company’s own fanciful forecasts revealed in meeting notes exposed by a hacker earlier this month. (See: Will Twitter really make $1.54 billion in 2013?)

The report says that what makes Twitter potentially more valuable than competing social networks is its accessibility to low-end mobile phones, which reach 2.5 times as many people around the world as the conventional internet access does. It’s also the cheapest way to generate successful sales leads compared to targeted e-mail or direct mail, according to the report.

So how is Twitter going to pull this off? The most likely strategies include charging businesses for premium accounts and levying a fee on third-party developers. NeXt Up!’s research team thinks that web ads seem less viable given company culture and the fact that 80 percent of users don’t access the Twitter site directly, opting for desktop clients and mobile apps instead.

The bullish $589 million scenario would also make the company worth more than twice what it was estimated to be worth during its most recent round of fundraising, which attracted Benchmark Capital and Institutional Venture Partners among others.

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Tags: co:Twitter, social-networking