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Many are suggesting that TikTok would be overvalued at $50B. If that's the case, do you believe FB is overvalued at $662B? Instagram, as of 2018, was estimated
by alehul 6y ago
Many are suggesting that TikTok would be overvalued at $50B.
If that's the case, do you believe FB is overvalued at $662B? Instagram, as of 2018, was estimated to be worth around $100B on its own (with about 1b MAUs, versus TikTok's 800m).
TikTok seems at least equally addictive, and its algorithm does a fantastic job at quickly showing good content that matches your interests.
- pjc50 6y ago.. and how's the revenue?
- alehul 6y agoGood question - TikTok generated $176.9m revenue in 2019, but it's still in its infancy in terms of generating revenue. Instagram, acquired for $1b in 2012, had $0 revenue. WhatsApp, acquired for $19b in 2014, had $10.2m revenue. Based on TikTok's usage-per-day and active users being comparable to Instagram, they could presumably generate ~similar revenue if focused on it. With these types of apps, growth comes first, and profitability comes later (and the profitability step seems to come easily, unless FB cannibalizes you).
- cj 6y ago[removed comment to add the following] Where are you getting the $176mm figure?
- basseq 6y agoAlso, from the article: "The investors’ bid values TikTok at 50 times its projected 2020 revenue of about $1 billion..." So that's a projected revenue growth of 465%. That's still projected, but a big number.
- rydre 6y agoProjected revenue for 2021 is $6b. $50B valuation is robbery at day sight by investors. TikTok's China sibling Douyin is projected to make $28 billion this year in China.
- pjc50 6y agoAstonishing - I take it tiktok is quite heavy on video advertising then? I'm surprised to see the advertising market be so lucrative within China.
- zippy5 6y agoThere’s no way they could generate similar revenue per user. Revenue per user depends on much advertisers are willing to pay and there are a couple of differences: 1) Targeting: Instagram has exceptional ad targeting because it utilizes facebook’s existing data which TikTok tool doesn’t have. 2) Online spending: In theory wealthier countries / demographics should have higher online spending. May also have correlations with gender, age, employment status, number of digital devices, delivery infrastructure, etc. 3) Advertiser relationships: the real customers have to want to put their stuff next to your content. 4) Political risk: if many countries ban it, it’ll lose access to a lot of high value markets. Lastly, profitability doesn’t always come later particularly for high bandwidth applications. Personally I’ve been getting a higher number of ads from YouTube but they are exceptionally poorly targeted (I skip at-least 90%). I would expect google to have as much data as anyone. The only explanation I have is that it’s simply too expensive to produce video ads to have an efficient targeted ad market.
- askafriend 6y ago> There’s no way they could generate similar revenue per user. I'll take the opposite side of this bet any time. TikTok will become a juggernaut on par with Instagram and perhaps even surpassing it.
- jbob2000 6y agoApps are easy to install... and easy to uninstall. Where's Snapchat these days? What about Vine? What about tumblr? These companies make apps to try to monetize a community, but communities are fickle and easy to scare off. If I were an investor, I'd value these apps for the computers in their offices and the code their developers write and that's it. Maybe $100mil if you get me on a good day. You can't value them for their reach, because it's not the company or the app that makes them valuable, it's the community.
- josephpmay 6y agoSnapchat is doing great and making money. They're still worth over 33 Billion.
- rattray 6y agoIn my personal experience, Instagram ads are shockingly good (they often hit me with something that I actually want) and Tiktok ads shockingly bad (I've never seen one I didn't swipe through immediately). Obviously Tiktok and their advertisers will be doing a lot of work on this, and they've only just begun, but I really wonder about the efficacy of the medium for ads. It seems like a much more difficult forum for that. Even youtube ads I've heard are often cheaper than fb/google ads, perhaps because the video format is so challenging for advertisers to get right (plus it's expensive to produce good creative).
- paulpauper 6y agoIt depends how you count a user interaction. YouTube ads are pay per view. A view is defined as someone watching the ad for 30 second or longer, at which point the advertiser gets billed for a view (around 10 cents or so). However, only a small % of these views lead to a click to the advertiser's website. So although the PPV is lower than contextual CPC, it is about the same when one compares actual traffic to the website.
- patrickaljord 6y agoInstagram ads are better but TikTok is way more entertaining to me. I almost always get a chuckle or even a laugh every time I use TikTok, last time I opened Instagram all I got was boring food pictures, pictures of dogs and a friend's family picture...
- rattray 6y agoI agree completely – and I wonder if it's part of the problem. If an advertiser on TikTok doesn't entertain me, I'm swiping. Whereas on Instagram, I'm more willing to look at some pants or whatever for a second – it's not that much less interesting than the competition (baby pics).
- patrickaljord 6y agoGood point, haven't thought of that. I guess Instagram is still in trouble because of the loss of eyeballs to TikTok. I've seen a few famous TikTokers advertising products at the end of their video. Maybe they could require taking a cut there. I guess they'll figure something out, that's why they hired all those facebook executives.
- chvid 6y ago50B is low; only meaningful because the US government is holding a gun to TikTok's head.
- Firebrand 6y agoIt’s been reported Facebook has been offering exclusivity contracts to some of TikTok’s most followed personalities for its new competitor, Reels. It reminds me of Microsoft’s streaming platform giving millions to Ninja and Shroud only to close it down months later. TikTok has been very good at focusing on new content discovery first when you open the app, making you swipe left to see the people you follow second—this is the opposite of Instagram. If Facebook does manage to pull people like Charli D’Amelio and Addison Rae to Reels and makes them more prominent, it would really be interesting to see two different philosophies compete against each other.
- lightroast123 6y agoI feel that new personalities would just take their places given TikTok's would just push different videos should some leave. Since the magic of TikTok is the "for you" page, if reels does not replicate well then it may not take away a significant share. While instagram stories hampered growth from snap, they've also seemed to have some failures ex. competing against twitch. There were some tournaments hosted on the fb gaming platform but it seems like many of them have returned to twitch.
- kozhevnikov 6y agoHave there been any major Facebook flops? They seem to be very successful in acquiring (WhatsApp, Instagram) and diversifying (Facebook Messenger, Instagram Stories) the next social thing. They are no Yahoo or, on occasion, Microsoft.
- hibern8 6y agoMoments, Poke, Camera are a few. Local could be huge if they had the right strategy.
- eganist 6y agoFacebook keeps putting this bizarre emphasis on stamping their brand on everything they come up with to keep their brandname relevant. Sounds more like Facebook should restructure as a holding company and keep creating independent concepts to see what succeeds, but keeping the Facebook name is likely an ego-driven decision.
- paulpauper 6y agoAt this point, give how wrong over the past decade pundits have been about Tesla, Uber, Facebook, Shopify, Amazon (and many others), I am inclined to discount/ignore any prediction of a rapidly-growing consumer tech or app company being a bubble. These pundits have a horrible track record of predicting this sort of stuff. A common thread for why these forecasts tend to be so bad is, such pundits ignore the growth of free cash flow and operating profit margins, erroneously lumping one-time expenses as being the same as a recurring cost. Yes, they can both make a company lose money, but a company that does not incur recurring advertising and other expenses is in a much better position than a company that loses money on every sale/user-acquisition and tries to make it up on scale. This was the problem with Groupon and also Fab. They advertised heavily on Facebook in 2010-2011, paying way more in recurring costs to acquire users then they could ever hope to recoup from sales. If you are paying $1-2/click (Facebook ads are expensive, especially for US adult traffic) and given all the click fraud and fake likes, maybe only 1/50-1/100 convert, if you cannot extract at least $100 of value from each user, you die.
- reaperducer 6y agoAll of that is only true if you only look at the successes, such as those you’ve illustrated. For every pundit-bashed unicorn, there are tens of thousands of times the pundits got it right.
- paulpauper 6y agolook at all the articles since 2010 or so about Amazon and Tesla being bubbles. Or before that, articles in 2007-2010 about Facebook being Myspace. Or about Uber dying due to debt (this was in 2014-2016). These are the companies pundits write the most about ,and have been wrong. Yeah, many unicorns do fail or get acquired for sub-billion, but pundits seldom if ever write about them, except when they fail. The media wrote way more articles about Uber being a bubble than Fab, even though Fab died and Uber is doing well and worth >$40 billion .
- buran77 6y agoThe obvious difference is that none of those examples had the US government as an adversary. In such cases it's hard to evaluate any product or service based on its merits but rather based on which side of the political games they fall on. It is in the US's general best interest for Uber or Tesla to succeed, no so for TikTok, quite the opposite actually.
- stunt 6y ago> algorithm does a fantastic job at quickly showing good content that matches your interests. Well you really don't have to do a lot to have better content than Instagram. I'm glad TikTok could prove that social network users including very young generation can produce better content. Otherwise, Facebook was going to brain damage half of the earth population with the type of culture they are promoting for profit. And everybody was going to blame generation for it instead of the world that we designed for them.
- runawaybottle 6y agoHow much is Facebook projecting each user to be worth? I’m trying to figure out how the $662B valuation makes sense. Would love some insight into this, are they factoring in the propensity of the marketing industry to spend to come up with that projection? Yeah, I think it’s overvalued by several hundred billion, which is scary dangerous when you think about it. That’s a bubble that tech might not be ready to reconcile.
- pankajdoharey 6y agoOfcourse Platform companies are overvalued. There is no real tech here just user content they are trying to monetize. Infact I would go ahead and say real tech was under valued look at Sun Microsystems, A company that Developed its own Processor (Sparc) , Its own OS (Solaris) , Its own Database (Mysql) , Its own VM (Virtual Box) , Its own Language and Development Platform (Java), Its own Development IDE (Netbeans) every one of those products is real technology and a leader in its own category. And yet the company was sold at 1 Billion USD, which seemed like short change.
- marcodave 6y ago> And yet the company was sold at 1 Billion USD, which seemed like short change. That was 2009 though, was 1B USD small compared to the average corporate acquisitions at the time? Instagram was also sold for 1B if I recall correctly.
- pankajdoharey 6y agoExactly my point Instagram is not technology, it is a platform for user content. Sun was a technology company with some real deep tech.