Photobucket Can Barely Give Itself Away: Implications

Henry Blodget: Every news organization on earth is reporting ValleyWag's scoop that Photobucket is about to sell to News Corp. for about $250 million.  Even if Photobucket has the typical Web 2.0 attributes--small revenue and big losses--this price seems surprisingly low for a site with a reported 41 million users and 2+ billion images. 

Sure, $250 million's an absolute fortune, but it's nothing like what the company would have fetched if, say, Google were at the table.  Alas, Google does not appear to be in the market for a photo-sharing site, so Photobucket will have to settle for the stingier News Corp, which needs to keep $5 billion on ice for its run at the Journal.

The Photobucket price may have implications for the hundreds of other Web 2.0 companies founded with no business model other than "selling to Google."  Photobucket is by almost any measure wildly successful: most companies would kill for 1/10th as many users.  If the sans-Google exit value such a company is in the low-hundred-millions, however, then hundreds of other less-successful start-ups might be advised to lop a zero off their own exit dreams.  Skype and YouTube may remain startling exceptions.

Comments

[Daniel Gardner]

I disagree, I don't think the price is low at all, it takes into account that MySpace holds over 50% of there traffic (there ability to block this was an important component in the valuation which they proved when they blocked Photobucket videos).

They are being acquired I think for there content which they wish to tag themselves as this could be useful as a competitor against Flickr and other photo companies, not to mention that they can now control the primary source for there own photo's (and therefore can protect there users from whatever Photobucket would do as a private entity).

Just because Google are valuing companies like it's 1999 they should not be the basis for acquisition values, this one was pretty reasonable I think all things considered.

I posted a couple of articles about this recently on my blog, my latest one being here

[Pavan Lee]

Hi Henry,

Let's take one step back before we look into the trending. Have you looked into the methodology of Fathom's index?

Thanks,
Pavan

[sohbet]

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[ugurss]

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[asicocuq]

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