• by Erik Sass , Staff Writer @eriksass1, August 2, 2011

I'll be honest and tell you that I have no idea if Twitter is worth $8 billion -- the current value assigned to the company after the latest round of investment, which saw Digital Sky Technologies and others pour another $800 million into the microblogging service, according to AllThingsDigital. But I can tell you that the increase in Twitter's valuation over the last two years actually correlates pretty well with the increase in the total number of users and the expanding volume of traffic they produce, globally.

At first glance Twitter's massive increase in valuation, as reflected in a series of investments over the last couple years, might strike some as evidence of a social media bubble. After all, even with great future prospects it's easy to be skeptical about any company whose valuation increased from $250 million in January 2009 to $1 billion in September 2009, $4 billion by December 2010 and now $8 billion in August 2011. That's a 3,100% increase in value in less than three years -- and this from a company that is still struggling to build an effective business model (projected ad revenues of $150 million in 2011 are less than 2% of its current valuation).

Presuming that the future still holds the key to unlocking monetization for Twitter's millions of users, it may make more sense to compare the increase in valuation with the total number of users. But the most convincing correlation is at the global, not the U.S., level.

The number of unique visitors to Twitter.com in the U.S, which grew rapidly from 2008-2009, has subsequently leveled off around 25 million-30 million. And focusing on this U.S. data, the soaring valuation doesn't make a lot of sense, as Twitter's valuation increased 3,100% while the total number of U.S. unique visitors increased "just" 580% from January 2009-June 2011. Of course, the traffic figure may also be less meaningful because it doesn't measure the large and growing number of people who access Twitter via mobile devices and through integrations with third-party platforms.

However, the increase in valuation traces the increase in global unique visitors more closely: total unique visitors around the world increased from 6.1 million in January 2009 to 139 million in May 2010, a 2,178% increase over this period. An even better proxy for comparison may be the total (global) volume of tweets sent per day, which increased 100-fold from two million to 200 million over the same period.

These figures make it clear that Twitter, like Facebook, is building a real international user base, connecting people around the world. But from a hard-nosed, dollars-and-cents perspective, does Twitter make sense as a global enterprise? Should its valuation be based on the number of American users, who after all form the core target audience for its nascent ad business, or on the number of global users, where the path to monetization may be less clear?