Our view on ‘Internet’ valuations

We follow 57 publicly traded internet companies in various sectors including social media, marketplaces, content distribution, gaming, ecommerce, payments, and new hardware. The multiples are pretty varied. Below is the data along with a few observations.

-Social media can do no wrong. The median revenue multiple is now 10x with Snapchat and Facebook leading the way at 22x revenue and 11x revenue respectively.

-The revenue multiple for marketplaces increased to 3.8x, although the multiple is volatile. The eighteen companies in this data set are diverse, but on median generate $1.1bln in revenue with 14% YOY growth and positive EBITDA ($97mm) and cash flow ($162mm).

-Content distributors are showing real weakness. The revenue multiple of the comp set which includes Google and Netflix is now at 3.4x, down from 6x in Q1 2017. That said, Netflix’s revenue multiple jumped materially this quarter to 12.1x and Google’s revenue multiple is strong at 6.0x. It’s the rest of the group which includes underperformers like Pandora that is bringing the multiple of the sector down.

-Gaming is strong with revenue multiples of 6.5x and continuing to trend up.

-Ecommerce is steady, with a median revenue multiple of 1.6x. That said, there is a big difference between what we would call premium ecommerce like Alibaba and Amazon (13.8x and 4.5x), versus soft ecommerce like Blue Apron (0.4x revenue). The Wall Street Journal put out a scathing article on the meal box delivery sector, with a VC from Greycroft quoted as saying he knows no one that is actively looking at the space anymore — and Greycroft made money on Plated.

-­Hardware is steady at 3.1x. Roku is the stand out of the group (6.3x) followed by Apple (3.8x).