Dusting Off an Old Internet Metric: Value per Eyeball

This morning's WSJ ran a front page story discussing the potential investment in Facebook by MSFT.  The article also included a table which compared the number of unique visitors Facebook had in August versus the top ten Internet websites.   The table reminded us of an old metric analysts used to use in valuing Internet stocks -- value per eyeball.  For fun, we decided to blow the dust off this indicator and see how it applies to the top Internet websites today.

For each company on the list whose business is based solely on the Internet, we calculated their valuation per eyeball based on their August traffic and most recent market cap (Market Cap/August Unique Visitors/2).  Based on the WSJ article, Microsoft's investment in Facebook could value the company at $10 billion or $72.15 per eyeball.  While this may seem like a lot, Google's eyeballs are valued at over twice that ($158.26).  While Facebook's eyeballs are less valuable than the eyeballs of AMZN and EBAY, they are worth nearly twice the eyeballs of YHOO and over fifteen times the eyeballs of CNET.  Who knew tech geeks were so unpopular?

 

Comments

[CT]

Ah, I'm missing something here. Vistors in one month of 2007 compared to the overall value of a company hardly seems like a good comparision. This doesn't account for growth or about 100 other variables. I know you said "For Fun", but come on.

[Paul Hickey]

CT,

Thanks for commenting. As ridiculous as it sounds, back in the late nineties, 'value per eyeball' was actually a valuation metric for internet stocks that analysts used and often quoted with a straight face. In no way are we saying that a certain stock is overvalued or undervalued based on this metric. We were just having fun with some of the mistakes of the past.

[TraderMark]

Yeh great point! I mean if you annualize the eyeballs the value per eyeball is dirt cheap! Long eyeballs!

Gosh, are we destined to repeat ourselves this soon? Wasn't it just 7 years ago we went through this? We now have 10s (100s) of mini specialized social networks running amok, doctors, lawyers, car buffs, people whose kids start with the letter D or L... can't wait to see these all go public - then we can be right back to 99. Cripes.