Over the past week, Doubleclick has been making a lot of noise, suggesting that it is planning a public offering or a sale. Today they came out and talked about launching a supply and demand marketplace for display advertising. Right Media, a company that does this already, but lacks the direct access to publishers, last year got Yahoo! to buy 20% of the company. Clearly Doubleclick is one of many privately held firms that are getting interest from investors.
What are some of the other valuable privately held firms? At the risk of trying to do for free what some investment banks charge plenty to do, we look at some privately held companies and value them, despite the little amount of info there is on them. Feedback more than welcome.
Classifieds | Craigslist.org @ $1.75B
Craigslist makes $20M in revenue each year, so naturally based on that figure, it is worth at most $250M… but Craigslist is an untapped goldmine, worth far more.
Craigslist.org boasts some staggering monthly traffic numbers: 15M users, 5B pageviews, 750,000 new job listings, 14M new classifieds ads. It’s a Top 10 media property. If the site fully monetized its site by charging for more listings, ran display/banner ads, sold sponsorship (i.e. what typical media companies do), it would easily generate hundreds of millions of dollars in revenue, nearly $1B in fact as we demonstrated in our analysis earlier this month (link below). With profit margins in the 75% range, Craigslist could be worth more than Amazon or InterActive Corp., but less than Yahoo! According to our analysis, it could be worth in excess of $20B range.
It seems like a high number, but the site’s value is a reflection of the cumulative loss of value of newspapers, and we all know that is plenty. Sure, Craigslist is all commerce, and no informational content, but looking at the valuations of some of the following newspaper organizations:
- New York Times: $3.3B
- Tribune: $7.8B
- Dow Jones: $2.86B
- Washington Post: $7.17B
You can see that Craigslist is worth a lot regardless. Of course, if Craigslist monetized its site fully, then it could be argued that it would be less important in size and scope. As such, today we think Craigslist is worth more than what MySpace sold to News Corp., and about what YouTube sold to Google for, so above $1.5B (Google paid $1.65B for YouTube).
:: Craigslist.org: the Reluctant Billion Dollar Company?
Social Networking | Facebook @ $1.5B
Facebook is the world’s second largest social network, after MySpace, but by having nurtured its growth, it has managed to create a parallel, virtual directory mimicking real world networks, creating one of the world wide web’s most valuable platforms. What makes Facebook even more valuable is that it has cornered the 16-24 market and can leverage its penetration in this web-centric demographic to launch niche applications in practically endless segments. Facebook has done a lot of smart things and executed well, the site is worth well over $1B, but I am not sure any one company will, or should pay for it…
:: Facebook’s to do list in 2008: File for an IPO
:: Facebook will be worth $2.3B in 2010
Online Advertising | Doubleclick @ $1.25B
Doubleclick was taken private by SF based private equity firm Hellman & Friedman for $1.1B. H&F sold off two units for $535M and saw 2006 revenues hit $140M. A buoyant online advertising marketplace and a slugfest between MSFT, Time Warner’s AOL and Google implies considerable upward pressure in the potential price tag for Doubleclick. We would see a public offering value Doubleclick at over $1B while a sale could fetch $1.5B.
:: Doubleclick Has No Value to Google, MSFT
:: Why MSFT Won’t Buy Doubleclick
Online Ad Networks | Exponential (Tribal Fusion) and / or Blue Lithium @ $250-$400M
It’s nearly impossible to project a value on Tribal Fusion and / or Blue Lithium, two privately held ad networks due to a lack of data. So our number is very speculative. But, we have some data to delineate a range. For one, publicly traded 24/7 Realmedia is worth some $420M on Nasdaq, with some $60M in cash (as at December 31, 2007), for a net value of $360M.
Of course, TFSM swings back and forth into the red, so it would be worth more if it were profitable. On November 1st 2006, we ran some numbers and projected a value of $427M onto Blue Lithium, but at the time Blue Lithium’s leading comparable, TFSM, was trading at $10/share, now it’s at $8.40, down 16%, if you assume that this reduced valuation in TFSM will adversely and equally affect Blue Lithium, that means that Blue Lithium is now worth $359M. We don’t think that a fall in TFSM’s stock price should really impact Blue Lithium, especially since it is experiencing decent growth as a younger company and is said to be profitable.
How much is Tribal Fusion worth? Tribal Fusion is one of the main units of Exponential. Tribal Fusion says that it serves 18B monthly ad impressions. Between its CPM, CPC, CPA breakdown, on average, TF probably nets $0.33 eCPM, for nearly $6M/month or $72M per year in revenue. It probably generates 25% profit margins, so an EBITDA of $18M, with a P/E of 15 gets (50% liquidity discount x 30 p/e) a value of $270M. Add everything else and you are once again in the $250M-$350M range…
Please note, that TF and BL’s valuation (like all others) are wildly speculative due to a lack of information…
Professional Social Network | LinkedIn @ $250M
When LinkedIn last raised money, it had a valuation in the $250M range. Of course, valuation do not always have much to do with exit price tags, but that is what the investors agreed to last time, and the market dictates price, ultimately.
Part 2 is coming next week. If you know of any data on these or other companies that can help us optimize the analysis, we welcome and appreciate it. Are there any private companies you’d like to suggest? Email us at ash@mojosupreme.com and let us know…
Subscribe: