MySpace is trying to defend it’s territory, and in raw numbers it’s still kicking Facebook’s butt. Here’s some interesting data touting MySpace’s might.
It’s astounding really. It’s easy to jump in and gripe about how ridiculous the valuation is but it’s not totally out of the realm of possibility. But clearly, Facebook would have to be beyond Google-ish in it’s growth to make it reasonable.
I think an early Internet growth company should get a valuation of somewhere around 20-30 times revenue, and a mature company should get somewhere around 10 times revenue. Even Google, who is still growing like gangbusters, is incredibly sexy, and swathed in hype, is only worth 14 times revenue.
Facebook is early enough and is growing fast enough that it’s revenue should be growing at more than 100% per year. At 100%/year, for two years, they would be at ~$600M/year. Then, they’d have to stay at the 70-80%/year growth rate that Google has to warrant the 14 times revenue number. And that’s just to justify $15B; by the end of two years, I assume MS and the other investors are hoping it’s worth $30B.
Can they do it? That’s going to be really, really hard.