How Twitter Can be A $100 Billion Company And Can It Do It On Its Own? MKM Partners' Analyst Answers

MKM Partners’ Internet analyst, Rob Sanderson, recently published a note to clients in which he downgraded Twitter Inc TWTR to Neutral from Buy with a price target of $39. However, Sanderson believes that with proper execution, the company could be worth $100 billion.

Sanderson was on CNBC Friday to discuss the valuation of tech companies, as the NASDAQ Composite (INDEX: .IXIC) trades near its lifetime highs. Sanderson also spoke on how Twitter can reach the $100 billion mark.

Some Will Make It, Others Won’t

"There are some examples of fairly high valuations, certainly on near-term earnings basis," Sanderson began. "For those groups of companies, the investment community is looking out a few years of this growth cycle and discounting future earnings and some of them will grow into their valuations and others won’t make it."

Related Link: Suntrust's Top 5 Twitter CEO Candidates

The Way To $100 Billion

Sanderson was asked how he thinks Twitter can reach the $100 billion market-cap mark. He replied, "If they can really improve the user experience to their potential and they can monetize that user base, I think they can become a mass market service.

"$100 billion valuation is something that is a possibility for Twitter down the road, if they can execute."

An Incredible Content Story

On whether Twitter can do it on its own or if some other company needs to acquire the company, Sanderson said, "This fall and the latest set of improvements is going to be very telling. I think there’s an incredible content story at Twitter. The problem, the fundamental issue, is in identifying and surfacing that content for the right users at the right time.

"If they can execute on that, this has mass market applicability; and yes, it could be a very strong independent company. But if they fall flat here, I think the chance of execution on their own is pretty slim," Sanderson concluded.