Internet companies love to tout how many users they have, but how much is a user actually worth? Companies have varying business models, and a user for one is not worth the same for someone with a weaker business model. Internet companies are also interesting in that many remain unprofitable till late in their life.

Let's look at some online-based companies' average revenue per user and compare it with their market value per user.


Monthly Users (Millions)

Market Cap (Millions)

Market Value Per User

Average Revenue Per User (Nasdaq: AMZN) 100 $111,000 $1,110.00 $543.26
Groupon 37 $2,902 $78.43 $55.38
Google 1,000 $221,934 $221.93 $43.16
E Commerce China Dangdang (NYSE: DANG) 23 $400 $17.39 $30.43
TripAdvisor 54 $4,846 $89.74 $12.96
Baidu (Nasdaq: BIDU) 340 $40,432 $118.92 $8.50
Yahoo! 610 $17,674 $28.97 $8.16
LinkedIn 106 $11,110 $104.81 $6.82
Zynga 192 $2,484 $12.94 $6.62
Facebook (Nasdaq: FB) 960 $41,581 $43.31 $4.51
Renren (NYSE: RENN) 38 $1,520 $40.00 $3.68
Zillow 37 $1,119 $30.24 $2.43
Yelp 78 $1,192 $15.28 $1.37

Sources: Company reports, S&P CapitalIQ, Google Ad Planner.

Looking at numbers like this can give you hints at whether a company is overvalued or undervalued. Groupon came public with a market value per user of $465, and on the first day of trading, the market value per user rose to $605.

Without getting into Groupon's accounting -- which is a large issue in and of itself -- was Groupon really worth 50% of the value that Amazon is valued at per user, with an ARPU only a fraction of Amazon's?

Other recent IPOs of Internet companies have come at sky-high valuations, and we've seen how those have progressed.

  • Facebook came public with a market value per user of $116 while revenue per user was just around $5. Shares are down 50%.
  • Zynga came public with a market value per user of $53 while revenue per user was just $7.45. Shares are down 65%.

Calculating market value per user/ARPU (same thing as a price-to-sales calculation) can offer suggestions of what is priced at a high level.

For instance, LinkedIn trades at a price-to-sales ratio (P/S) of 15.4, Zillow at 12.4, and Yelp at 11.1.Baidu trades at a P/S of 14 and RenRen of 11. At the very least, the latter two companies have the ramp-up that comes with China's joining of the Internet economy.

In that context, E Commerce China Dangdang looks downright cheap at a P/S of less than 2 (the same as Zynga). Motley Fool analyst Brian Stoffel has been keen on the "Amazon of China," as Dangdang is sometimes referred to. Check out his take on the company.

Foolish bottom line
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.