We need to stop this kind of thing


Didn’t we learn anything from Bubble 1.0? Apparently not — or at least some of us seem to be determined to jump right back into it with both feet, regardless of the consequences. Guys like Mark Zuckerberg of Facebook could be forgiven, since they were probably playing on the swingset or learning long division when the first tech bubble came around. But how do you explain someone like RBC Capital analyst Jordan Rohan?

He apparently thinks that MySpace (which does not have 100 million users after all, as ForeverGeek tells us) could be worth $15-billion in a few years, or at least that’s what he told clients in something ironically called a “research note.”

As Pete Cashmore over at Mashable notes in a post, this estimate of MySpace’s theoretical value is predicated on a whole series of loony assumptions, including the alleged $1-billion value of Facebook and YouTube, multiplied by the market value of Google and the CPM (cost per thousand) ad rate that a premium show such as The Simpsons fetches.

In other words, Mr. Rohan’s argument (if I can even call it that) amounts to what philosopher Jeremy Bentham referred to as “nonsense on stilts.” Take some fictitious number that someone else has plucked out of the ether and multiply it by some other ridiculous number that can’t (or shouldn’t) be extrapolated — yup, that’s quite the “research” note, alright.

I know that getting attention is seen as a good thing in the brokerage business, as my friend Paul Kedrosky points out, but this is ridiculous. And former analyst Henry Blodget, who did his own bit to help inflate the first bubble, isn’t helping with a post that effectively says MySpace might be worth more than Yahoo, or not. Rob Hyndman is similarly unimpressed, as is Duncan Riley.

Comments (3)

  1. Lee Gomes of the WSJ reported on YouTube statistics recently. In this article ( I have a very irreverant site, but have an extensive background in finance) http://www.rabbitbites.com/misc/youtube.html , I demonstrate using numerous examples, how YouTube statistics are potentially flawed on many levels: viewership, demographics, bandwidth. The implications for this are quite big.

    Thursday, September 28, 2006 at 6:25 pm #
  2. Mathew Ingram wrote::

    Thanks, Nicholas.

    Thursday, September 28, 2006 at 9:34 pm #
  3. Mathew, chalk this guy up as a graduate of the Business Week school of self-promotion. Specifically, make up a ridiculous $ valuation about a high-profile W20 property, tell the world and then get mentioned in media/blogs around the world with the sole goal of promoting yourself.

    You’ve been duped.


    Saturday, September 30, 2006 at 5:15 am #

Trackback/Pingback (1)

  1. Mapping The Web on Saturday, September 30, 2006 at 6:47 am

    analyst, AKA Jordan Rohan from RBC Capital, claims that MySpace [IMG MySpace logo]could be valued upwards of $15 billion in a few years. If Internet pundits believe this to be true and accurate, then we are most certainly in bubble 2.0 for sure (see Mathew Ingram post). He pulls his facts and data from the most random and irrelevant sources at best. He factored Facebook’s potential $1 billion ‘valuation’ (ala Yahoo offer), YouTube’s apparent $1.5 billion valuation, and Google