When I heard that News Corp was selling Myspace, I was curious about the price, what with Facebook being valued at $50B (or $75B on SecondMarket) and Twitter at around $5-7B.
I’m surprised that News Corp’s trying to sell MySpace for a relatively cheap price of $100-200M. Most recently, they wanted $100M in stock from Zynga, makers of popular Facebook app Farmville. They were reportedly only willing to offer $50M cash.
Let’s take a step back for a moment. MySpace is currently the third largest social networking site with about 95M uniques/month worldwide as of August 2010. Their annual revenue for 2010 was $80M. News Corp’s willing to let it go for just $100M. That’s just slightly over 1 x annual revenue when most tech companies sell for at least 10x.
If you based it on Friendster’s sale price a couple years ago, then it might seem like a fair price. Friendster.com was sold to Malaysia’s MOL Global for $100M in late 2009. They had about 100M worldwide uniques, about the same as MySpace. I’m not sure what Friendster’s revenue was back then, but it should be a bit less than MySpace’s because the ad market in foreign countries is less than it is in the U.S. If you based it on Friendster’s sale price, then MySpace should be worth a little bit more than $100M just because they have a lot more U.S. users.
Let’s compare those numbers with Twitter’s. They made about $100M last year with about the same number of uniques, but here’s the kicker -- it’s valuation is $5-7B?! That’s 50-70 x annual revenue. Facebook made about $1B last year with about 600M worldwide uniques and is worth $50-70B -- again, 50-70x. Sure, MySpace is bleeding users, but how is it that MySpace’s valuation is about 1 x annual revenue, when Twitter and Facebook are 50-70 x annual revenue? So either MySpace is way undervalued or Facebook and Twitter are way overvalued, or both. I say both, but Twitter and Facebook are way more overvalued than MySpace is unvalued. It’s all based on hype, which Facebook and Twitter has plenty of right now.
REFERENCE:
Compete.com: MySpace vs. Twitter vs. Facebook
http://siteanalytics.compete.com/myspace.com+twitter.com+facebook.com/
(This chart shows that MySpace still has a lot more U.S. uniques than Twitter: 44M to 28M respectively. Facebook is number one with 128M.)
ComScore: Twitter Bypasses MySpace in Monthly Unique Visitors
http://www.mediabistro.com/webnewser/comscore-twitter-bypasses-myspace-i...
“Facebook topped the list for August, with 598 million unique visitors... Twitter tallied 96 million unique visitors in August, up 76 percent versus August 2009, while MySpace totaled 95 million, down 17 percent from the year-earlier period, Digits added.”
Zynga Balks At News Corp's MySpace Asking Price
http://www.businessinsider.com/zynga-balks-at-news-corps-myspace-asking-...
“That's a tough sell in a world where MySpace traffic is almost half what it use to be just a year ago and annual revenues are down to ~$80 million from ~$300 million a couple years ago. MySpace also has some legacy contracts related to music and movies that might make the site less attractive.”
Zynga Should Buy MySpace For $50 Million (NWS)
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/02/23/businessinsi...
“Answers.com, which has garbage Google ad inventory, growing revenues, some profits and about 55 million US unique users (ComScore), just sold for $127 million.”
“Zynga might not like the deal because MySpace users don't have as much disposable income as Facebook users. Also, you can't underestimate how fast MySpace visits are dropping. The site had 70 million US uniques in January 2010. It's down to 44 million.”
Friendster’s Cautionary Tale Ends in $100 Million Sale
http://mediamemo.allthingsd.com/20091210/friendsters-cautionary-tale-end...
“Looking for a more positive spin this morning? Okay, try this: Friendster’s sale represents the Internet’s power to reinvent companies. Even though no one you know uses the site, it never went away, and it has quietly amassed a reported 100 million users, almost all of them in Asia.”
