YouTube has recorded more than a billion active users per month and this is in line with social media giant Facebook Inc. (NASDAQ: FB).
According to Bank of America Merrill Lynch analysts, YouTube is now valued at almost $80 billion. This is more than the market caps of eBay Inc. (NASDAQ: EBAY), Yahoo Inc. (NASDAQ: YHOO) and other popular S&P 500 (SPX) companies.
In a note to clients this week, Justin Post, a Merrill Lynch research analyst, said that YouTube is a huge asset that warrants huge valuation.
Post further added that he believes that YouTube accounts for more or less 20% of Google Inc.’s (NASDAQ: GOOG) $368 billion market capitalization. According to comScore, the video platform’s users spend more of their time on YouTube than they do on Twitter and Instagram.
The site’s valuation is calculated by using a 7X revenue multiple, which Post stated is less than the revenue multiples he uses for Facebook Inc. (NASDAQ: FB), LinkedIn Corp. (NYSE: LNKD) and Twitter Inc. (NYSE: TWTR).
Added to this, Justin Post forecasted revenue growth for YouTube of around 34% to $8 billion this year and he also sees that number increasing to $13 billion by 2017.
To bring YouTube’s valuation into perspective, here are 3 well known S&P 500 index (SPX) companies that currently hold lower market cap valuations, they include; eBay Inc. which currently holds a $71.3 billion market cap, Starbucks Corp. (NASDAQ: SBUX) is valued at $76.2 billion and Costco Wholesale Corp. (NASDAQ: COST) is valued at $63 billion.
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