Select your localized edition:

Close ×

More Ways to Connect

Discover one of our 28 local entrepreneurial communities »

Be the first to know as we launch in new countries and markets around the globe.

Interested in bringing MIT Technology Review to your local market?

MIT Technology ReviewMIT Technology Review - logo

 

Unsupported browser: Your browser does not meet modern web standards. See how it scores »

Credit: Infographics.com

When Facebook went public, the company was valued at $104 billion, an astonishing figure for an Internet company. Was the figure preposterously high? That depends on how you look at it. The value in Facebook lies in its enormous audience—901 million people every month who are potential viewers of advertisements and buyers of virtual goods. So you could think of Facebook this way: it was worth about $116 for every user it has. On that basis, the company wasn’t being valued as highly as Google ($200 per user) or even the question-and-answer service Quora ($145). This metric also reveals that investors are much less optimistic that Twitter (worth less than $60 per user) or Tumblr (about $8) will profit handsomely from their very large audiences.

Another reason this metric is useful: it indicates that for all the hype around Facebook and its kin, the situation isn’t as hyperbolic as it was in the dot-com boom. Remember Excite, one of the first Web portals? It and its 18 million users were worth as much as $6.7 billion—$372 per user—to the @Home Network in 1999. The next year, Lycos was valued as highly as $12.5 billion, or $431 per user. It might be of little solace that valuations aren’t as inflated as they were 12 years ago, but at least today, unlike then, there is a sizable amount of Internet ad revenue to vie for.

This article was updated on May 22 to reflect the peak value for Lycos, rather than its closing acquisition price.

32 comments. Share your thoughts »

Tagged: Computing, Web, Facebook, market

Reprints and Permissions | Send feedback to the editor

From the Archives

Close

Introducing MIT Technology Review Insider.

Already a Magazine subscriber?

You're automatically an Insider. It's easy to activate or upgrade your account.

Activate Your Account

Become an Insider

It's the new way to subscribe. Get even more of the tech news, research, and discoveries you crave.

Sign Up

Learn More

Find out why MIT Technology Review Insider is for you and explore your options.

Show Me