According to Peter Kafka, MySpace has been seeing a slow down in growth on a year-over-year basis. That’s not really a secret though considering the most recent traffic data from comscore as well as taking a look at charts of MySpace via Compete.com and Alexa. While Facebook continues to rise as the most dominant social network, MySpace growth has come to a halt but revenue isn’t too shabby.
According to Peter Kafka, the company will generate an EBITDA (earnings before interest, depreciation, taxes and amortization) of $155 million this year on revenue of near $650 million. That surpasses Facebook’s public estimate of more than $300 million in revenue this year. That’s not surprising though considering the plethora of advertisements displayed around the site.
Peter Kafka has used 15x and 20x EBITDA multiples to determine a valuation of somewhere between $2.3 and $3.1 billion. The largest problem lies with the projected revenue growth which is between 10 and 15 percent year over year. This highlights the larger problem at hand: nobody has yet to figure out how to monetize social networks effectively.
Google continues to post massive growth rates despite a declining economy but the second largest social network appears to be dwindling. Things don’t appear to be much brighter at Facebook aside from continued growth abroad which is keeping the company highly attractive. One thing is clear: while social networks command a large percentage of attention online, they generate only a small fraction of the revenue. This is a problem that must be solved if the social web is going to continue to thrive.