This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

What Are 'Users' Worth in Valuing Companies? A Lot -- if They Pay Up

Stocks in this article: AAPL AMZN FB KING NFLX TWTR ZNGA

NEW YORK (TheStreet) -- What's a user worth online?

To backtrack -- online companies track their users carefully, referring to them as MAUs. Those are monthly active users, and each is a person who's tried an online site or service and likes it.

Most of the time, MAUs refer to users of apps or websites. They usually don't pay for a service, although sometimes -- most often in the case of gaming companies -- they do.

Usually, a paying user of a service is called a "subscriber." Typically, these types of MAUs pay on a monthly or annual basis.

Facebook (FB), for example, has 1.28 billion MAUs. Its market cap is $156 billion. That's about $122 per user.

However, Facebook also has acquired Instagram and WhatsApp in the past two years. WhatsApp had 450 million MAUs and was bought for $19 billion. That works out to $42 per MAU. Instagram had 20 million MAUs two years ago and was bought for $1 billion. That's about $50 per MAU.

Of course, Instagram has increased its MAUs from 20 million two years ago to 200 million today. That means Facebook only paid $5 per MAU two years ago -- a bargain.

Facebook doesn't tell us how much overlap exists between the MAUs of its different services however. Presumably this is because there is a lot of overlap.

This means that, in total, Facebook probably doesn't have many more than 1.3 billion MAUs. I would guess no more than 1.5 billion.

What about Netflix (NFLX)? The online movie distributor has 44 million subscribers or MAUs. Each streaming subscriber pays roughly $7.99 a month (more internationally); those who receive DVDs in the mail pay more. Netflix's market cap is $21 billion. So each subscriber is worth somewhere around $477.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs