Yahoo recently sold at 4.8 Billion USD while Flipkart is valued at 9 billion
Yahoo was recently acquired by Verizon for $4.8 Billion Cash, while Flipkart is valued at $11 Billion. Why is Flipkart bigger than a global search engine company?
|Monthly Visits||6.4 B||47.5M|
With the above figures it is clear that Yahoo is a bigger company than Flipkart but the valuation is tricky.
Initially valuated at $15 Billion in 2015, while Yahoo was evaluated at $125 Billion in the year 2000. This year Flipkart was evaluated at $ 9 Billion, in 2008 Yahoo was offered $44B from Microsoft.
There are number of ways to be looked at these valuations
- As per equation, if a company makes a huge loss, it would be evaluated at the loss price. If Yahoo gets an offer of $4.8B (will making $4.4B loss) Flipkart should be valued at $600M+Brand (Made recent loss of $600M). Brand value cannot be 13 times of the actual value.
- If Yahoo with more than 600M active monthly users is evaluated at $4.8B Flipkart’s valuation should be $380M (Since Flipkart has lesser than 47M users)
- Flipkart is valuated at $9B because of the huge potential it has in Indian e-commerce industry. Similarly Yahoo has huge potential in global search engine market and should be evaluated at $80B+ (based on Google’s present value, as it is the market leader in this space)
In our previous article we did talk about how Flipkart has been valued based on Company Revenue+Brand+Market Potential, if this is how startup valuations are done then the only loser will be the investor.
Our take on Flipkart
Flipkart is presently having a run rate of $600M in loss per year and as per their recent update they will run out of money in the next 1-2 years. They might not get the expected investment at this valuation and with the probability of further being marked down. To raise the valuation, they have consumed Jabong for 1/5th the asking price, knowing Jabong was on the verge to enter the billion club. This acquisition will help Flipkart raise expected investment, further capture market, and eliminate competition.