Putting a Pricetag on Hot Private Companies

How much would today’s hot private companies be worth if they could magically begin trading on a public exchange? That’s hard to say, given that there aren’t a lot of public companies to compare to in areas like social networking and electric car manufacturing. But at least some analysts are speculating publicly.

I came across some interesting reading along those lines today on SharesPost.com. The exchange site, which launched about a month ago, lets owners of private company stock sell blocks of shares to other private investors. There are a number of startups working on doing this too (SecondMarket, XChange, etc.). But one neat feature that SharesPost has is a list of analyst reports on the companies, offering valuation estimates and some historical data.

For eHarmony, for example, the site links to a report from NextUp!, the research firm founded by SharesPost board member and former ThinkEquity CEO Michael Moe. The report says that eHarmony currently has more than three million active members, more than $200 million in annual revenue, and that its appropriate market capitalization should be between $764 million and $820 million. That’s in sharp contrast to a report from VC Experts, also on the site. Looking at eHarmony valuations in previous funding rounds, and comparing that to Nasdaq’s performance, it finds that the company’s current implied valuation is around $356 million.

The two analysts are reversed on Facebook. NextUp says it’s worth between $3.15 billion and $4.34 billion. VC Experts puts its estimate for current implied valuation around $8.4 billion. Judging by what a seller on SharesPost is asking ($14 per share), VC Experts’ price is probably closer to the going rate. (To achieve its recommended valuation, NextUP says, Facebook shares would have to go for between $7.20 and $9.90 each.)

Other estimated valuations include: $1.4 to $1.65 billion for LinkedIn, according to NextUp, $147 million for HuffingtonPost, according to VC Experts, and one billion dollars for Tesla Motors, according to NextUp.

On a side note, NextUp also has an interesting tidbit about eHarmony’s ad spend, which it estimates at more than $100 million annually. Their reasoning? According to NextUp: “Due to the stigma attached to using an online matching site, users do not usually refer their friends or family to the site, thereby depriving eHarmony of valuable word of mouth advertisement.”