momentum?Where’s it going?So if you ask me to explain why people are paying $ billionfor Uber, you know why?Because they think they can sell for $ billion.That’s basically it– that they thinkthat they can take it in a public offering for $billion.Are they right?
If the momentum continues, they could very well be right.Does that mean that Uber has a value of $ billion?That’s a very different question.Sometimes price and value can diverge.And if they diverge, they can give youvery different numbers.The social media space is a pricing space.In fact, if you ask me why social media companies tradeat what they do, I have a very simple answer.It’s not because how much they made in revenues.It’s not because how much money they make.Thank god for that, because most of them make no money.So here’s what I did.I
decided to let the data tell me what drove the pricing.And here’s what I did to answer the question.I took every social media company.It’s easy to get the public information, what the marketvalue is.And then I collected all the information I couldabout these companies– what they had in revenues,what they had in earnings.What I was trying to figure out is,how is the market pricing these companies.What is it using to come up with the prices?And I drew on statistics to answer that.All I did was a correlation between the market capand different variables, to see which one had the highestcorrelation with the market.So what is it that makes some social media companies valuableand the others not?And you could look across the correlations.And by far– look at the correlation.
The most critical variable in explainingthe market Valuers Brisbane value of a social media companyis the number of users.I’ll give you a very simple way to value social media company.Here again, you can save yourselfthe trouble of hiring a banker.You tell me how many users you have.If you go back to the previous page,the market is paying about $ per user.You tell me how many users you have.I’ll tell you what your value is going to be in the company.So how many users does Twitter have?
million. million times is $ billion.We’re done.Who cares about cash flows, growth, and risk?Facebook is billion users, million users.They wish they had billion.What planets are you going onto?. billion users– you multiply that by .You get $ billion.And remember last year when Facebook bought WhatsApp?How many of you have WhatsApp on your phones?How many of you pay for your WhatsApp?That settles my case, like one in five people.In fact, last