May 29, 2011
Facebook currently rakes in $2 billion per year which has created a secondary market valuation of $75 billion for the social network or the equivalent of 37.5 years worth of revenue. Facebook however has an advantage over other social media company’s, they are everywhere from major websites to local stores where you can buy Facebook Credits.
So what about other social media companies? For example, LinkedIn was recently valued at $9 billion, despite earnings of just $200 million per year and an advertising structure that looks less than desirable? Or Twitter who’s own advertising efforts have left the company with just $150 million in revenue per year, yet an evaluation of $7.7 billion at a time when many of their “sponsored Tweets” attempts have shown lower than expected/desired Click Through Rates (CTR’s).
We can also look at Groupon which is valued at nearly $25 billion with yearly earnings of $760 million to see that the valuation of company’s are out of proportion to their values.
Social media site G+, which is made up of sector professionals and academics has posted the following Infographic about social media valuations. They don’t draw conclusions via the Infographic but it’s a real eye opener when you place these online company’s against brick and mortar organizations who have released their own IPO’s.
Here’s the Infographic: read more