Twitter risks overvaluation after reported $800m funding boost

Twitter has secured a "significant" round of funding that will be used to expand the micro-blogging site internationally, but analysts have warned that the company is now seriously overvalued.

The new funding will be led by venture capital firm DST Global along with several existing Twitter investors, according to a company blog post.

"Now we have an opportunity to expand Twitter's reach with a significant round of funding," said Twitter. "We will use these resources to aggressively innovate, hire more great people and invest in international expansion."

Twitter did not disclose the amount of the funding, but reports suggest that it could be as much as $800m, valuing Twitter at around $8bn.

Quocirca analyst Clive Longbottom argued that this would make Twitter hugely overvalued.

"We are heading towards a social media bubble. Valuing Twitter at $8bn is too much and is plain stupid," he told V3. "At some point people will see the emperor's new clothes."

Longbottom suggested that too many investors are pouring money into social media sites, and that the big players will start to lose revenue as the market becomes increasingly saturated.

"Lots of investors are climbing onboard thinking social media is a gravy train that won't stop. But individual investors on Wall Street will find themselves in a bad situation and they are the ones that can least afford it," he said.

"The battle between Facebook, Twitter, LinkedIn and FourSquare has meant the players have seen strong growth, so people think it's a great area for investment, but as soon as one loses revenue, Wall Street will pull out."

Longbottom added that the emergence of Google+ has demonstrated how easy it is for a new social media player to take attention away from the more long-standing sites.

"Social media isn't going away. Like when we had the dot-com bust, it wasn't the end of the internet, but too many social media platforms will dilute the social media concept."