- Using multiples is not a perfect method to understand the valuation of a business. It's one of many. It's a proxy. It's quick.
- This chart uses 2011 financial data. Facebook is growing fast - their multiples would come down significantly if we used 2012 projections - which we don't have. If I had more than 10 minutes on this - I would use 2nd half of 2011 or Q4 2011 as a run rate.
Quick Thoughts (Not Conclusions):
- In Ben Horowitz's argument against the bubble - he says the valuations they were seeing at AH for large private tech companies (like facebook) is in line with large public tech companies (google). So just looking at the data quickly, I was disappointed that FB appeared to have higher multiples (his blog post: http://bhorowitz.com/2011/03/24/bubble-trouble-i-don%E2%80%9...)
Disclaimer: This analysis is flawed
- Using multiples is not a perfect method to understand the valuation of a business. It's one of many. It's a proxy. It's quick.
- This chart uses 2011 financial data. Facebook is growing fast - their multiples would come down significantly if we used 2012 projections - which we don't have. If I had more than 10 minutes on this - I would use 2nd half of 2011 or Q4 2011 as a run rate.
Quick Thoughts (Not Conclusions):
- In Ben Horowitz's argument against the bubble - he says the valuations they were seeing at AH for large private tech companies (like facebook) is in line with large public tech companies (google). So just looking at the data quickly, I was disappointed that FB appeared to have higher multiples (his blog post: http://bhorowitz.com/2011/03/24/bubble-trouble-i-don%E2%80%9...)
- DAYAM FB has a crazy operating margin
- And they're getting better at monetizing each user. User growth was 40% from end of 2010 to end of 2011, while revenue grew 80% (http://allthingsd.com/20120201/facebook-has-845-million-user...)