IMO WORTHTHIS WAS GIVEN TO ME FROM A FRIEND. FLOATIN
There are many considerations for the way that social media sites are valued. Some of these include:
Growth – How fast is the social media site growing?
Traction – How much are people using the social media site?
Revenues – When will revenues generate and from where?
Market Leader – How prolific is the brand and its attraction to bring in new users?
Viral – Is the marketing for the site organic creating momentum where users recommend the social media site to each other?
Value Proposition – What need does the social media site fulfill and does it add value to the global online community?
Competitive Advantage – Is the social media site a leader in its area and does is have universal appeal?
Great applications are game changers. Many of us never knew what a “Google” was 12 years ago, but today Google is not only a recognized brand – for many of us it is a verb “I Googled this or that”.
Facebook was a star a few years ago and Microsoft invested at a $15 Billion valuation. Shortly thereafter, the shine began to fade and reports were rampant that maybe Facebook had potentially burned out losing most of its valuation. Today, Facebook is estimated to be worth up to $45 Billion.
Many social media sites challenge us to understand the way that the world is changing. Younger users spend more time “chatting” online using text / typing that verbal or video – just check out the teenagers in your lives and see them non-stop texting or chatting with their keyboard.
The world is also getting a whole lot smaller. Today Chinese and Spanish speaking people outnumber English speaking people by over 60 million and that number is growing.
As the Internet, portable and mobile computing continues to grow, the world becomes smaller in terms of communication. The need to be able to universally communicate becomes the next big opportunity.
The following are examples of leaders in the Social Media space:
Facebook
In mid December, BNN (Business News Network) reported that stated Facebook could have a valuation as high as $45 Billion.
Given that Facebook now has over 550 Million Monthly unique users, that valuation gives each user a valuation of approximately $82 US. That’s amazing considering Facebook is expected to only generate approximately $2 per user per year.
Facebook is now about 8 years only and over the past 4 years has grown from about 27 Million Unique Users per month to about 550 Million, a 20 Fold increase over the past 4 years.
Twitter
In late November, TechCrunch reported that a bidding war had broken out for Twitter, now estimated to be valued at in and around $4 Billion. This has been a very quick run up from the expected valuation of $3 Billion and the $1 Billion valuation it raised funds at in early 2010. According to Compete.com, Twitter has just over 26 Million unique users giving each Twitter user a valuation of approximately $153. This number may reflect some of the “bidding war” valuation.
Twitter has been around since 2006 and continues to define its business strategy. In 2009, Twitter reported that expected revenues for 2010 would be in and around $140 Million. If this is the case, revenues would be approximately $5+ for each unique user per year.
So how does Ortsbo stack up in all of this?
Although Ortsbo is still very new, it has made some remarkable strides in performance over its short life of only 5 months. Remember Facebook is approximately 8 years old and Twitter is 5 years old – Ortsbo is only 5 Months old.
Growth – Ortsbo has had a 60 fold increase in growth over the past 4 months and is well on its way to passing 30 Million minutes of user engagement
Traction – The average Ortsbo session is approximately 5 minutes per user. That is a significant amount of chat time.
Revenues – Ortsbo has a 3 prong revenue model – Advertising, which has already begun and is getting traction. Second, there’s Ortsbo’s email platform for translation which will sell for approximately $30 per user and then there is a private multi-lingual chat platform for companies / government / education / etc. which will be charged per user per month. This multi-prong approach gives Ortsbo the ability to grow revenue on a number of fronts.
Market Leader – Coming out of nowhere just a few months ago, Ortsbo is all over the online media, chat sessions and millions are using it. Ortsbo’s ability to integrate with all the key social media sites, email and private chat and instantly translate language gives it an opportunity to be a leader in the market space.
Viral – Over 95% of Ortsbo’s users visit the site directly by typing in
www.ortsbo.com – users are recommending it to each other, creating a viral effect and tremendous growth.
Value Proposition – Ortsbo’s value proposition is simple. Ortsbo is like the Star Trek “universal translator” as it allows people all over the world to chat through social media and email in over 50 languages – in REAL TIME!
Competitive Advantage – There are other translating services out there but none integrate with all the major social media sites, offer multi-platform, multi-recipient, multi-language, real time translation and offer an integrated email platform. Ortsbo destroys the language barrier!
What does this mean to valuation?
Looking at the Facebook and Twitter valuations, we see that revenue is not the overlying consideration in the valuation equation. The other areas mentioned above clearly have a major impact on the increasing value of these properties.
Generally speaking, the typical valuation range for unique monthly users for social media sites are between $45 and $90 per user, with some like Twitter experiencing larger valuations based on “bidding wars” or other extra ordinary events.
If we look at Ortsbo, for demonstration and discussion purposes only, we can use the unique monthly visitors as published online at
www.intertainmentmedai.com/blog and from the recent performance metrics, we can see that the average unique monthly users are in and around 2.1 Million. Using this as a basis, we can estimate that a potential value for Ortsbo might be:
Old numbers:
Low Range:
2,100,000 unique monthly users @ $45 per user = $94.5 Million
High Range:
2,100,000 unique monthly users @ $90 per user = $189 Million
New Numbers:
Since its launch on July 22, 2010 Ortsbo has achieved the following performance:
90.3 Million Minutes of User Engagement
61.6 Million Page Views
27.1 Million Online Sessions
18.1 Million Unique Visitors From Over 170 Countries / Territories 49,000 Facebook Fans
6,400 Twitter Followers
Low end value at this rate is now $380 Million
High end is now $760 Million, no wonder we walked away from the last offer. 3-6 months from now we could see $1 Billion plus IMHO.
In fairness to these numbers, one should also consider that this is for demonstration purposes only and that a consideration should be given that Ortsbo is still relatively new. However, give the impressive growth curve for Ortsbo to date and the market penetration, viral aspects and the multi-pronged revenue strategy, you can start to see how Ortsbo could potentially make a huge impact into the global social media arena.
Potential Conclusion
Ortsbo, which is a division of Intertainment Media Inc. (TSXV:INT) has quickly established a significant presence in the online chat / multi-language market. Ortsbo, in just 5 months has seen a 60 fold increase in engagement – 30 million minutes of online user engagement. Ortsbo users spend an average of approximately 5 minutes in each user session chatting and over 2.1 million unique, individual users are coming to Ortsbo.com every month.
From the performance metrics reported, Ortsbo is already in the “hockey stick” curve and continue to grow at a feverish pace having take just over 100 days to reach 10 million minutes of user engagement, 30 days thereafter to reach 20 million minutes of user engagement and just about 3 weeks to reach 30 million minutes of user engagement.
Given generally typical ranges of valuation Ortsbo could achieve values at 10 times, or more, the original valuation offered to INT in September 2010 of $30 Million.
THESE ARE MERELY MY THOUGHTS ON MARKET CONDITIONS AND STOCK VALUATIONS. INVESTING IN THE STOCK MARKET CAN BE VERY RISKY AND YOU SHOULD ALWAYS CONSULT AN INVESTMENT PROFESSIONAL BEFORE MAKING ANY DECISIONS. ULTIMATELY YOU ARE RESPONSIBLE FOR CONDUCTING YOUR OWN DUE DILIGENCE AND PROTECTING YOUR MONEY.
GOING AROUND THE WEB.
VERY EXCITING TIMES.
TIMBERONE OUT.