Facebook Apps Are Ridiculously Overvalued?
I tend to agree with Matthew on this one. I realize that these services can pull in great amounts of money through advertising, but do they pull in earnings that would put them into a multiple anywhere near reality?
CenterNetworks recent post has an anonymous commenter who claims that their application will bring in “ad revenue in the lower millions this year.” Let’s assume that for a minute. Lower millions is 1-2 million? Then we are looking at a 15-30x revenue valuation. That’s insane. Plus, this is a fairly volatile industry to be in. I seriously doubt that any of these companies could ever see this type of money.
That being said, if someone was willing to pay that much for an app, then all the better for the developer.