Vice Is the Tech Bubble
Vice Media, a company that sells cool kids to corporations for marketing purposes and does good journalism on the side, is a legitimately profitable business. Makes a lot of cash. But is Vice really worth one jillion skillion bazillion dollars? Hmm...
In an interview with Bloomberg yesterday, Vice boss Shane Smith said that he is thinking of taking the company public. Okay, fine. That would almost certainly destroy whatever remaining punk ethos resides in the Vice empire, but that is a side issue. Let's focus on how much Smith pretends his company is worth:
The growing online, mobile and TV business could have a market value equaling Twitter Inc.'s $28.9 billion if Vice Media goes public, Smith said.
"We'd be stupid not to test what the market would bear," said Smith, who is chief executive officer. "There's a lot of money sloshing around in the system, obviously valuations are high."
Obviously! Valuations are high! Is Vice Media worth $28 billion? Hmm. Last August, Rupert Murdoch invested in Vice at a valuation of $1.4 billion. Shane Smith posits here that his company has increased in value by 2000% in the past seven months.
That is the tech bubble talking.
Vice is privately held, so its financials are a matter of some speculation. The company is "expected to post revenue of $500 million this year," according to one insider. How much of that is profit? We don't know. But even if it was all profit, which it is not, a $28 billion valuation would give a public Vice Media a P/E ratio of 56. For a media company! (Most media companies would like investors to value them like tech companies. This does not mean they are not, in fact, media companies.) By comparison, Disney's ratio is about 22; Time Warner's is about 17; and the New York Times Co.'s is about 40 (which is also rather high).
That is the tech bubble talking.
Of course, Shane Smith may not be the most unbiased source of opinion on what Vice Media is worth. But the fact that such speculation would even be credulously reported goes to show that shit is fucking insane right now. (Twitter is insanely valued itself, by the way!) I guess you can't blame Shane Smith for wanting to cash in while the getting is good. I'd IPO my balls for a billion bucks, too.
[Do check out Danny Gold's VICE documentary on the Central African Republic, it's great. Pic via.]