What is Enterprise Value? Enterprise Value often referred to EV, is a metric that quite literally measures the total value of a company. The size of a company varies from startups to listed companies, and depending on these sizes, there are various ways to measure the Enterprise Value of a company. Today, we will cover EVs and how to easily interpret them.
Generally, there are two ways of assessing EV: quantitative and qualitative evaluations.
Quantitative evaluation: Assessed based on metrics, such as the company’s sales, profits, losses, etc.
Qualitative evaluation: Assessed based on non-numerical aspects, such as the company’s growth potential, news, manpower, and industrial flow.
Large companies are often evaluated quantitatively because there’s a lot of data to refer to. Startups, however, are often evaluated qualitatively because there are insufficient materials to see.
Instagram, Facebook, and YouTube have all become giants of their own or have been acquired by other giants. But they were also startups at one point. In the case of Facebook, its Enterprise Value currently sits at $615 billion. In 2019, according to Statista, back when its EV was just above $500 billion, it was still the 6th largest company in the world based on market value. As for Instagram, although acquired now by Facebook, Bloomberg estimated in 2018, that it would be worth more than $100 billion if it were to be a standalone company. Instagram and Facebook are testaments for how large and impactful social media companies can be in the world today.
We spent some time today looking at Enterprise Value and two main ways of evaluating companies. As exemplified by Facebook, which boasts top EV compared to any company out there, Seereal Box also aims to become a global social media platform with a top enterprise value that other social media companies model after.