According to Michael Arrington, Founder of TechCrunch, Facebook is going to be more profitable than Amazon this year because of its high profit margin (50%), and high revenues growth. Amazon will have around $40B in revenues while Facebook will have around $4B in 2011, but both will have around $2B in profits. Market valuations are $107B for Amazon and $75B for Facebook.
Zynga, the online game company will make its IPO in the coming weeks. It is still very dependant on the business model of Facebook. Zynga has right now a $11.7B private market valuation.
Source:
http://uncrunched.com/2011/10/24/facebook-will-probably-be-more-profitable-than-amazon-this-year/
Louis Rhéaume
Infocom Inbtelligence
louis@infocomintelligence.com
Twitter: @InfocomAnalysis
A blog on the convergence of info-communications industries: communications, computing, electronics, entertainment, publications and education. Strategic, technological and financial analysis. English and French blog. Cette chronique traite de l’évolution des industries de l’information et des communications et couvre des aspects stratégiques, technologiques et financiers, comme l’économie du savoir et de l’innovation. L’auteur est Associé principal de Infocom Intelligence.
Showing posts with label Zynga. Show all posts
Showing posts with label Zynga. Show all posts
Monday, October 24, 2011
Sunday, February 06, 2011
Want to invest in Facebook, Twitter or Zynga? The secondary market exist.
The secondary market is facing a huge Internet private market stock bubble. Facebook is valued at $64 billion on Sharespost,com , Zynga at $6 billion, Twitter at $4 billion, LinkedIn at $2.5 billion, eHarmony at $667M, Goupon $5 billion, Huffington Post at $112M. Most of those firms will become public firms trading on official stock markets in 1-3 years, or sooner. The social network sector is very hot right now, maybe too hot for value investors.
To view these opportunities, securities laws require that you must first be qualified by their affiliated broker-dealer as an accredited investor. Once qualified, you will be able to access information about auctions, private placement memorandums and other offering materials. SharesPost then connects you directly with the managers of these offerings, and, whenever possible, the companies’ executives, so you can ask questions and come to an investment decision.
It necessitates a $1M value in net worth and over $200,000 in revenues per year.
In order to trade, one must register at www.sharespost.com
To view these opportunities, securities laws require that you must first be qualified by their affiliated broker-dealer as an accredited investor. Once qualified, you will be able to access information about auctions, private placement memorandums and other offering materials. SharesPost then connects you directly with the managers of these offerings, and, whenever possible, the companies’ executives, so you can ask questions and come to an investment decision.
It necessitates a $1M value in net worth and over $200,000 in revenues per year.
However, it is normally recommanded, to not invest more than 5% in private equity for a portfolio minimum well over $1,000,000.
Louis Rhéaume
Infocom Intelligence
louis@infocomintelligence.com
Wednesday, October 27, 2010
Are we entering in a second Internet stock market bubble?
Everybody knows the Internet bubble of 1998-2000. Valuations of most firms with a link with Internet got very high valuations and after lost a lot of value in 2000-2002. At that time a firm with the name .com was found sexy by acquirers and represented a great potential takeover target with the exchange of shares (which were only going up) instead of cash. After the crash, firms surrounding the Internet, which had a poor business model, lost most of the time 90-95% of their values, or went bankrupt. E-commerce mutual funds which had 200% return in one year and a half, like Altamira E-commerce fund lost 90% of their value in 2001-2002.
Time has changed and the web 2.0 has seen the emergence of new sexy players such as Youtube, sold to Google and Facebook, just to name a few. I just read that Facebook's value has triple in 2010 only. Social networks is the new sexy sector and now you can find a 4 years old firm like Zynga, which is a social video game firm, with a value higher than Electronic Arts, which is 28 years old firm in video game. Zynga is now valued on the secondary market at $5.27 billion on SharesPost, where Zynga employees can sell shares that they own in the private company. EA is worth $5.24 billion in public trading on the Nasdaq stock market. The SharesPost listings are thinly traded compared to EA’s stock, but it is perhaps the only real measure of the value of Zynga’s stock at any given moment. Several hope that Zynga will go public, but it hasn’t any plan yet.
I simply don't understand why people will pay real dollars to use virtual currency in virtual games. Zynga is expected to grab roughly a third of the $1.6 billion market for virtual goods in the U.S. in 2010, thanks to virtual goods sales. Zynga got the momentum when in the middle of 2009 they launched FarmVille, which is still the No. 1 game on Facebook with 57.4 million monthly active users. With such popular games, Zynga can cross-promote its titles and advertise them as well, allowing it to turn lots of its games into huge hits. In addition to FarmVille and Texas Hold Em Poker, FrontierVille, Mafia Wars, Cafe World, Treasure Isle and PetVille all have more than 10 million users. Overall, Zynga has 214.5 million users. CrowdStar has 54.2 million monthly active users, and EA is No. 3 at 44.7 million users. EA bought Playfish for $400 million in the fall of 2009, but is still behind Zynga in that area. However, EA’s online game revenue is at $750 million in the current fiscal year, or around 20 percent of overall revenue, is significantly bigger than Zynga’s online game revenue, which the only source of revenu of Zynga. The largest independent maker of video games is Activision Blizzard, which has titles such as World of Warcraft.
It appears that the market values Zynga as equal to EA in market share, so it is deeply discounting the rest of EA’s nearly $3 billion or so in traditional video game console and PC game revenues. It seems that Zynga is truly overvalued and in some sectors of the Internet, like the Web 2.0 we are in the presence of a second Internet bubble.
Another example of this is Apple, which has 83% of the market capitalization of Exxon Mobil. Apple has a P/E ratio of 20.8 and Exxon a low 12.8. It is true that Apple is one of the best innovator in the world and has created a dependency for its customers toward its proprietary platforms, such as iTunes and Apple Apps store. Apple is more a telecom firms and a content firms than it was before, as an hadware firm. The potential of its mobile advertising network is huge. The question is can Apple create on the long term 83% of the profits of a firm, such as Exxon Mobil? I explained in previous comments that the dependency of Internet mobile can create huge values. However, I have a certain doubt that it would represent a long-term oligopoly, such as gas with Exxon Mobil. We are much more dependent right now (and in the medium term) toward gas than toward Internet Mobile access and its ecosystem (apps, music, etc.). In a bubble it won't mean that P/E ratios will diminish in the short term, but in the medium and long term, there will be important depreciation of overvalued Internet stocks.
Louis Rhéaume
Infocom Intelligence
louis@infocomintelligence.com
Time has changed and the web 2.0 has seen the emergence of new sexy players such as Youtube, sold to Google and Facebook, just to name a few. I just read that Facebook's value has triple in 2010 only. Social networks is the new sexy sector and now you can find a 4 years old firm like Zynga, which is a social video game firm, with a value higher than Electronic Arts, which is 28 years old firm in video game. Zynga is now valued on the secondary market at $5.27 billion on SharesPost, where Zynga employees can sell shares that they own in the private company. EA is worth $5.24 billion in public trading on the Nasdaq stock market. The SharesPost listings are thinly traded compared to EA’s stock, but it is perhaps the only real measure of the value of Zynga’s stock at any given moment. Several hope that Zynga will go public, but it hasn’t any plan yet.
I simply don't understand why people will pay real dollars to use virtual currency in virtual games. Zynga is expected to grab roughly a third of the $1.6 billion market for virtual goods in the U.S. in 2010, thanks to virtual goods sales. Zynga got the momentum when in the middle of 2009 they launched FarmVille, which is still the No. 1 game on Facebook with 57.4 million monthly active users. With such popular games, Zynga can cross-promote its titles and advertise them as well, allowing it to turn lots of its games into huge hits. In addition to FarmVille and Texas Hold Em Poker, FrontierVille, Mafia Wars, Cafe World, Treasure Isle and PetVille all have more than 10 million users. Overall, Zynga has 214.5 million users. CrowdStar has 54.2 million monthly active users, and EA is No. 3 at 44.7 million users. EA bought Playfish for $400 million in the fall of 2009, but is still behind Zynga in that area. However, EA’s online game revenue is at $750 million in the current fiscal year, or around 20 percent of overall revenue, is significantly bigger than Zynga’s online game revenue, which the only source of revenu of Zynga. The largest independent maker of video games is Activision Blizzard, which has titles such as World of Warcraft.
It appears that the market values Zynga as equal to EA in market share, so it is deeply discounting the rest of EA’s nearly $3 billion or so in traditional video game console and PC game revenues. It seems that Zynga is truly overvalued and in some sectors of the Internet, like the Web 2.0 we are in the presence of a second Internet bubble.
Another example of this is Apple, which has 83% of the market capitalization of Exxon Mobil. Apple has a P/E ratio of 20.8 and Exxon a low 12.8. It is true that Apple is one of the best innovator in the world and has created a dependency for its customers toward its proprietary platforms, such as iTunes and Apple Apps store. Apple is more a telecom firms and a content firms than it was before, as an hadware firm. The potential of its mobile advertising network is huge. The question is can Apple create on the long term 83% of the profits of a firm, such as Exxon Mobil? I explained in previous comments that the dependency of Internet mobile can create huge values. However, I have a certain doubt that it would represent a long-term oligopoly, such as gas with Exxon Mobil. We are much more dependent right now (and in the medium term) toward gas than toward Internet Mobile access and its ecosystem (apps, music, etc.). In a bubble it won't mean that P/E ratios will diminish in the short term, but in the medium and long term, there will be important depreciation of overvalued Internet stocks.
Louis Rhéaume
Infocom Intelligence
louis@infocomintelligence.com
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