Twitter (TWTR) is down 26% year-to-date for 2016. Does it perhaps represent a compelling value option in a world where high-growth technology companies are rarely traditional value plays?Twitter’s business model is predicated on advertisement revenue. To make this viable, Twitter relies on getting eyeballs in front of these ads to deliver a feasible ROI for those who invest in the ads. Accordingly, like many Internet companies, Twitter must grow its user base. The more users, the more likely businesses (or individuals) will be willing to invest in advertising on the platform. At the same time, it increases ad sales volume.Twitter’s growth should run on for several more years. The growth Facebook (FB) and Google (GOOG) stand to achieve with respect to online video content will benefit Twitter in much the same way. And while other social media networks represent competition, Twitter is still unique enough with its short-form style and convenience of its trending news platform that it isn’t necessarily in full direct competition to many other networks.Over the past five quarters, the company’s bottom-line has gotten progressively less negative from -$162 million for Q2 2015 to -$80 million for Q2 2016. Diluted net EPS could start turning positive as soon as next year. That, of course, assumes no purchase of the company is made within the year. Twitter is a commonly circulated buyout candidate, with rumors swirling since shortly after the company went public in November 2013. Stalling user growth over the past several quarters has many believing that the company has gone about as far as it’s capable of going on its own. After breaking 300 million monthly active users in Q1 2015 (10x growth over five years), it has since run into a band of resistance breaking beyond that general barrier.With takeout premium likely priced into the stock, it’s unlikely Twitter has any chance of being a traditional value candidate. Below I run down the standard input assumptions.-Valuation Inputs & Assumptions 2016 revenue of $2.6 billion. This should be easily doable. The company’s Q2 profits came about 2% below consensus, but $2.6 billion represents the lower end of the probable estimation range.Revenue growth of 20% year-over-year in 2017. I have this geometrically falling to 7.7% Y/Y ten years out.EBITDA margin of -5% for 2016. This could come close to turning positive by next year with its continuous quarter-by-quarter improvements. I have this figure linearly increasing 3% per year to 25% by 2026.Over the past three fiscal years, depreciation has settled at about 17% of sales. Capex has been 14.6% of sales over that same period. I have depreciation settling to 14% of sales and capex down to 12.5% of sales long-term, as neither figure should be as high as they currently are going forward. When it comes to projections, the exact numbers aren’t completely important so long as they’re reasonable. Higher capex will decrease cash flow (and hence your valuation figures) but depreciation will increase it as a non-cash expense. They work in tandem; therefore, so long as they’re proportional and make financial sense (e.g., depreciation should not trend down if capex trends up) the absolute figures should not matter as much.Cash flow from operations growth of 2% (standard assumption to model long-term economic growth)Tax-wise the company should be south of the standard 35% marginal rate. It will be able to carry several years’ worth of NOL’s forward and R&D expense is eligible for tax credits.Under these inputs, Twitter’s would hypothetically shape up according to the diagram below, in terms of EBITDA, NOPAT, unlevered free cash flow, and working capital:-Capital StructureI believe companies that don’t turn a profit (i.e., positive net income) should stay away from debt. Based on my model of synthetic bond ratings that rely on coverage ratios (i.e., EBIT to interest expense), Twitter should minimize its debt until the company is in better operating shape. At the moment, the company is roughly comprised of 88% equity and 12% debt. I have its WACC computed at 7.72%.-ValuationBased on discounted cash flow, this would give Twitter an enterprise value of $11.2 billion, or roughly an 11% undervaluation relative to its intraday market value of $10.1 billion. Its equity alone would by priced at a median value of $18.67 per share, or 9% undervalued relative to its current price. Based on sensitivity parameters involving +/- 50 basis point adjustments of both the WACC and long-term growth rate, we have a total fair valuation range of $15.86-$22.70 per share. Under WACC adjustments alone, the range is estimated at $16.86-$20.86. Twitter closed the day at $17.14.If one wanted to purchase at a 20% discount to the lower end of this range, purchase price would come in at $12.69 per share. At a 10% discount, $14.27 per share. A 30% discount to median fair value would dictate a purchase at $13.09. A 20% discount to median fair value would suggest a purchase at $14.94. It is all contingent on one’s level of risk tolerance and philosophy. Based on this analysis, many traditional value investors might consider the stock at somewhere in the $14-$16 range, with deep value types preferring it down in the $13’s. Twitter’s all-time low came at $13.73 on May 24, 2016.-ConclusionI value Twitter at about 9% higher than its current price in terms of median valuation. I think a buyout will become increasingly likely should the company’s user base growth continue to stall. Therefore, regardless of user base growth figures, I believe each situation will bode well for the bulls on the stock. (Further user base growth is bullish for revenue growth projections, while stagnant growth increases the likelihood of a buyout at a premium to current share price.) Nonetheless, I would prefer to see the stock below $15, or ideally $14 – holding everything about what I know about the company as is – before I would be willing to become a shareholder.