$870 mln value from Merger & Acquisition financial analyst calculation
Velti fetches $870 mln value from Merger & Acquisition financial analyst calculations. To derive valuations in internet, technology, mobile and related businesses is hard given there is no gold standard. Just look at Facebook for example. Its current market capital is around $68 billion. It will have annual sales of $7 billion. So based on sales multiples it commands almost 9x. No other things considered like earnings, debt, patents, litigations and other derivables. Now lets get back to Velti. Company should have sales over $300 mln in 2013 so just based on it if I give the same multiple as FB then I conclude value of $2.7 bln
But I am very conservative when it comes to deriving company valuations as I factor every aspect of the business fundamentals including industry multiples, comparison to competitors valuations and what not. My most conservative estimate for current valuation is $870 mln so obviously current $270 mln today's value on stock market makes this pretty attractive for companies looking to acquire.
If this company was private the offers well could be like Instagram that received $1 bln from Facebook despite it having barely any revenues at the time of acquisition.
I suspect there are some private equity luring to take this private by making a decent offer but more likely scenario is for companies like Google or Facebook or Millenia Media to grab this opportunity to buyout at attractive valuation. To throw $1 bln is pocket change for companies like FB, GOOG, AOL or even AAPL to whom this could be very strategic & complimentary investment.
FB would and can easily buyout this company and so can others to whom it makes sense to have it for example GOOG or AOL. Question will be now how long can VELT manage to remain independent given some buyout vultures will be preying this great company. Imagine instantly getting some of over 1400 world's best companies as your advertising customers.
IMHO this is, without any news coming, looking like a short play today to bring down the price to cover. I know that sounds like a stretch but without the uptick rule in place these events happen when we see huge short positions like what Velti has.
IMHO I think we could see the same thing happen to the market when or if the short interest rises too high, that is my biggest concern. The SEC needs to have a strong uptick rule like the one in the 1930's that stabilized markets for 70 some years before the Cox SEC removed it, and they wonder why the retail investor sits on the side line. If I am right about a short play move to cover, Velti could recover quickly to even possibly in a few days, unless there is a real reason that us regular guys and gals are not privy to but if so it won't shine well for wall street. We will see in the coming next few days.