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If they have $600MM revenue, then even applying a modest 5x multiplier would give them a $3B valuation right? And 10x might be closer to what they might actuall
by jogjayr 8y ago
If they have $600MM revenue, then even applying a modest 5x multiplier would give them a $3B valuation right? And 10x might be closer to what they might actually fetch if they were to ever sell.
- traek 8y agoMultipliers are on earnings, not revenue. A “modest 5x multiplier” on Walmart’s revenue would give them a valuation of $2.5 trillion.
- mcbits 8y ago15x is modest for a virtual-product company net earnings, in cases where there are earnings after the accountants are done. A 5x multiple of revenue would value Netflix around $60 billion. And if Walmart had the assumed 30% margins, they probably could be a $2.5 trillion company. Their revenue is more than 2.5 times their almost-$1 trillion competitor.
- qubax 8y agoAlso, standard multipliers are pointless on "unicorns". You have to figure out potential for future growth and the potential of the space itself. Facebook bought instragam for $1 billion even though there was no significant revenue or income. But the potential for growth of instagram itself and the photo sharing social media space was immense. With established companies like walmart in establish spaces like retail, you know what you are getting. With tech unicorns, it's a bit of a gamble.
- jogjayr 8y agoIt depends. For a mature business like Walmart, you'd look at EBITDA, and margins to arrive at a valuation. For a growth business, especially a SaaS business, revenue might be used until there's actual earnings.
- mrnobody_67 8y agoYeah, valuation seems low... Look at marketo for a good comp: 21x EV/TTV - http://tomtunguz.com/marketo-vista-ma/ http://tomtunguz.com/marketo-vista-ma/