CoRise has just released a really interesting report on the value of networks. Leveraging off a post my one of my partners, Dan Ramsden, we were able to compare some of our thoughts on a network’s value and the Facebook’s IPO document (S-1).
There are some very interesting similarities, particularly between Mark Zuckerberg’s letter to shareholders and our theories. What we thought was most interesting though was the implications on valuation. While most investors will look at the value of $FB on an Enterprise Value to Revenues or EBITDA, as well as on a PE basis, we tried to look at it a different way. We wondered, at the $100b high end of the range valuation, what would that imply in lifetime avg revenues from a member. We took the net present value of this and derived a value of merely ~$400.
Bob Peck, President CoRise Co