Why BuzzFeed might actually be worth $850-million or more

Matthew Turlip, Senior Financial Analyst with Privco says BuzzFeed’s content, which often features quizzes and lists, is far ahead of its competitors in terms of deploying effective, industry friendly native advertising.

Controversial low-attention span website BuzzFeed made headlines early this week with a $50-million dollar investment from vaunted Silicon Valley investment firm Andreessen Horowitz that values the company at $850-million.

This news will of course be held up in some circles as another sign of a pending tech bubble, but is it? One expert says the valuation isn’t so crazy.

Matthew Turlip, Senior Financial Analyst with Privco was on BNN’s “Business Day” yesterday to talk about the site, which was founded in 2006 and today sits along CNN and The New York Times as one of the ten most highly trafficked information sites in the U.S. and is now more valuable than the Washington Post and the L.A. Times parent company Tribune Publishing.

But Turlip says comparisons to those staid properties is off base.

“You’re better off comparing it to a company like Yahoo…which is currently trading at about seven and a half times its trailing twelve month or 2013 revenue,” says Turlip. “If you look at Buzzfeed, at an $850-million valuation is about seven times its 2014 projected revenue of $120-million.”

A 7x multiple, of course, might be considered pricy if we were talking earnings, not revenue, but Turlip says BuzzFeed has seen significant growth in a short period of time, noting that it last round, done in January of 2013, valued the company at just $200-million.

So what does he think tech legend Marc Andreessen sees here?

“Mobile, that the big thing about BuzzFeed and I think what Andreessen Horowitz sees”, says Turlip. “More and more content is viewed on a mobile device and content providers like BuzzFeed will be the delivery mechanism.”

BuzzFeed now boasts nearly five times the monthly unique viewers as the Wall Street Journal. Of course, they are looking at content like “This Dog Was Elected The Mayor Of A Small Town In Minnesota”, and not “U.S. Weighs Mission to Save Yazidi Refugees”, but Turlip says BuzzFeed’s content, which often features quizzes and lists, is far ahead of its competitors is terms of deploying effective, industry friendly native advertising.

View the full interview here.