In the 2004 Facebook example, when the company had no profit or revenue, which valuation approach was recommended?

In the 2004 Facebook example, when the company had no profit or revenue, which valuation approach was recommended?

• A. EV/Unique Visitors and EV/Pageviews
• B. A far future DCF
• C. EV/Revenue
• D. EV/EBITDA

Answer: (A)

When a company has no profits or revenue yet, focus on what drives future value: the audience and engagement. For an early social platform, the business model hinges on monetizing the user base later, so measuring value per user interaction makes the most sense. Enterprise value per unique visitor and per pageview directly captures how much value the business can generate from its audience, and it allows meaningful comparisons across similar platforms and growth stages without needing current revenue or earnings. A far-future DCF is possible but highly speculative when there’s no revenue to base projections on, and multiples like EV/Revenue or EV/EBITDA aren’t workable when those figures don’t exist.

When a company has no profits or revenue yet, focus on what drives future value: the audience and engagement. For an early social platform, the business model hinges on monetizing the user base later, so measuring value per user interaction makes the most sense. Enterprise value per unique visitor and per pageview directly captures how much value the business can generate from its audience, and it allows meaningful comparisons across similar platforms and growth stages without needing current revenue or earnings. A far-future DCF is possible but highly speculative when there’s no revenue to base projections on, and multiples like EV/Revenue or EV/EBITDA aren’t workable when those figures don’t exist.