Meebo, Bebo and AOL, Oh My!

Website valuations are fun to play with. Some of the valuations are absolutely ridiculous. About a month ago, I had written about the rumors of Bebo selling for \$1 billion. Now we have heard that Bebo was actually bought for \$750 million, and Meebo is trying to sell themselves for \$250 million. So, in order to remain fair, I decided to do another value comparison again, this time including Meebo. Let’s review the prices we have seen lately. Digg is still asking for \$300 million, and nobody seems to know if there is any interest. Based on the Microsoft investment, Facebook was valued at \$15 billion. Plaxo was recently rumored at \$200 million. Now we have the estimate of \$250 million for Meebo and the \$750 million price for Bebo. Thanks to our friends at Compete.com we have a pretty graph.

Given the traffic data from Compete, we can create the following table with the price per user.

Site Price Users Per Month Price Per User
Facebook.com \$15,000,000,000 28,563,983 \$525.14
Digg.com \$300,000,000 20,221,596 \$14.84
Bebo.com \$750,000,000 3,540,465 \$211.84
Meebo.com \$250,000,000 1,495,910 \$167.12
Plaxo.com \$200,000,000 868,235 \$230.35

So, we can see that Meebo has a price per user that is a reasonable amount less than the social networks. However, it is still more than 11 times the price of Digg. Given that Meebo is an Instant Messaging platform, I find it surprising that it is significantly more expensive than Digg. This just reiterates the “cheap” price tag that Digg currently has. The Bebo sale also puts other rumored prices into perspective. Since Bebo has much more traffic than Plaxo, you can deduct at least 10% off the per user price. So, if Plaxo were to sell at approximately \$190 per user, the selling price should be almost \$165 million. That sounds much more reasonable given that they still have not grown as expected. On the other side of the spectrum, you have Facebook with almost 10 times the traffic of Bebo. Let us assume that means a 20% premium per user. That puts the Facebook per user price at \$254 and a total selling price of \$7.25 billion.

This analysis assumes that someone will one day figure out how to monetize these sites better. If they do not find a way, then the prices should drop significantly. So, do you think there are other ideas that should go into these valuations? Are there any surprises?

3 thoughts on “Meebo, Bebo and AOL, Oh My!”

1. Digg’s offer may seem cheap, but no one seems too interested to buy it. Personally, I think we’ll see a continuing decline in Digg users. But that’s just a hunch.

And \$525 per user for Facebook?? Maybe I’m underestimating the return on the users, but that seems ludicrous to me.

If I were a buyer, I’d care less about user base than I would about a solid plan to turn those users into profits. How many users of a site actually click on ads? How many would pay for premium services? If I were a buyer and could be reasonably comfortable that I’d make x dollar per user, I’d pay x dollar per user to buy the site.

It’s a simple cost/benefit analysis. That’s what determines the value of a company to me. And those details are the ones you never read about, but are of most interest to me.

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2. admin

I am somewhat surprised that there has been so little interest in Digg. I can’t imaging that some of the larger media companies really care about the “minor” issues they have been having.

The best part of the valuations is seeing something like the difference in the Digg and Facebook prices. When I saw \$525 for a Facebook user I was shocked. That is typically more than most enterprise software licenses. And nobody seems to know how to properly monetize the users. There is only so much ad serving you can do.

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3. Exactly! For that much money, Facebook needs to show buyers a realistic plan for investment return.

I don’t care how much potential the site has, I can’t imagine recouping \$525 per user in the foreseeable future.

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