• BoomTown et al, Thursday, December 16, 2010 2:37 PM

On news of new funding at a $3.7 billion valuation, the industry is reflecting on the year Twitter had, its prospects for the future, and whether it's really worth all that money.

"The moves are big ones for Twitter, which is moving fast to upgrade its management and business model under CEO Dick Costolo," writes BoomTown's Kara Swisher, who first reported the additional $200 million in funding. "A big slug of cash will surely help the start-up's expansion efforts and essentially declares it is not for sale to bigger companies such as Google (quite yet, that is)."

Investment in tow, Twitter "will attempt to become the communications platform it has always wanted to be," suggests ReadWriteWeb. "That will probably mean acquisitions, it will probably mean a lot more sales people and advertising and it definitely means that if anyone is going to acquire Twitter, it will need to be for multiple billions of dollars."

On the down side, "The more money a company raises, the more pressure there is to show profitability," writes Fast Company. "Twitter can't ride the heels of funding rounds forever--nor be valued in the billions -- if it can't prove a steady revenue stream. While the company has heavily pushed Promoted Trends this year, it's unclear whether that'll be the last piece of the puzzle."

Not mincing words, Econsultancy is crying "bubble." "Quantitatively, there's little doubt that these companies have been given rich valuations," it writes regarding Twitter, Groupon, and even Facebook. "Twitter is generating revenue, but there's no indication that there's enough of it to justify a $3.7bn valuation."

Likely foretelling Twitter's future, the company has also added Flipboard's Mike McCue and David Rosenblatt, who once ran DoubleClick, to its board of directors.

In particular, McCue "is doing some of the most advanced thinking about publishing of anyone I speak with," top tech blogger Robert Scoble said on Quora. "Particularly his thinking around publishing/publishers and the future of advertising is very interesting. Also, he's doing some interesting stuff around picking the good stuff out of the stream."

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