Isn't something really weird going on in the world when you can sell a company with almost no revenue (let alone profit) and no obvious business model in the horizon for $ 1.1B, or is it just me?
Not exactly the same thing, but in a way it's similar to buying a broadcast license. Companies pay millions/billions for the right to project some media onto eyeballs.
So, let me rephrase the question:
Isn't something really weird going on in the world when you can sell a company with almost no revenue (let alone profit) and no obvious business model in the horizon for $ 1.1B,
AND
no bloody potential for that kind of profit either, similar to endless other deals that got nowhere for the buyer, or is it just me?
> It's really nothing like buying a broadcast license.
Both provide access to eyeballs, and both are bought with the intention of monetizing that somehow... usually with advertising. That's a similarity in my book.
http://www.forbes.com/sites/jeffbercovici/2013/01/02/tumblr-...
"The company finished 2012 with $13 million in revenue; the hope in this “leap” year is that it’ll get to $100 million."
2012 - Operating Expenses: $25 million, Revenue $14 million (that's an $11 million loss on paper)
For 2013, they're saying they'll need to hit 4x revenue growth in order to hit profitability?
Does that mean 4x the ads for their (fickle) userbase?
Then again I'm a giant noob when it comes to startups, funding and acquisitions. Regardless, the numbers are out of this world.
http://www.forbes.com/sites/jeffbercovici/2013/01/02/tumblr-...
Or, put another way: put a dollar value on a speculative Yahoo effort to attract a user base the size and demographic composition of tumblr's. Don't forget to price in the risk of failure.
What kind of bizarro logic is this?
For one, something being worthless doesn't mean it is also common. There are rare and difficult to attain things that are also worthless.
Second, we're discussing monetary worth here. That is, if you get something back for your 1.1 billion dollars.
A service giving you free money would also have 100k+ monthly page views and fantastic engagement numbers. But it would be worse than worthless.
http://techcrunch.com/2013/05/01/facebook-earnings-graphs/
Just to add some context, overall up 20%+ first quarter over prior year Q1. Granted flat in the first world and I could believe a small net loss but I don't see it in these numbers.
I'm sure FB does their best to lean on their metrics and spin the best story but at the end of the day they are publicly traded and those charts are not too ambiguous.
But sure, some of those accounts are fake every year. So a nearly flat gain in the US/Canada could well be a loss in actual humans using the service like they are meant to. I don't have a FB account myself because reasons and so I'm sympathetic to the idea that they may have peaked. Just wanted to give some balance.
Global churn affects your userbase when you have a userbase as insanely massive as Facebook's.
Also, according to all statistics, Facebook has actually been GROWING. They have 1.11 billion users now compared to less than 1 billion last year. Something like a 26% growth if I recall.
Come on people, there are only a finite number of internet connected human beings on this planet. Growth HAS to slow down at some point. They're not gonna double their userbase YoY if they already have over 1bn people on their service....that'd literally be impossible.