Grokking the value of a Facebook app

Mashable has an interesting article on the value of a Facebook app. They examined the publicly traded SNAP Interactive, which in December had two Facebook apps with a combined install base of about 5.5 million users. SNAP made $388,000 in revenue in their fourth quarter, which makes each user worth about 28 cents per year (388,000/5,500,000 * 4). Here’s what they might be worth if SNAP were acquired:

As a publicly traded company, SNAP is sporting a market value of around $10 million. At its current pace, the company looks to pull in $1.5-$2 million in revenue this year, meaning its price-to-sales ratio is 5:1. If you assume a 5x price-to-sales ratio, that would mean each one of SNAP’s users is actually worth around $1.40 (each user pulls in $0.28/yr, if the company is valued at 5x sales, you arrive a $1.40 per user valuation)

SNAP’s seen a lot of growth since the December 2007 numbers used in this article. They currently have just over 9.5 million users using their two apps, a gain of nearly 73% in less than 2 months. If Mashable’s math holds up, they could command $13.3 million in an acquisition. Side note: adonomics.com estimates the two apps are currently worth only about $5.5 million in an acquisition. Honestly, I think even the lower outcome would be phenomenal. I’m stoked to see what Facebook apps will be acquired and/or sponsored this year. And let’s not forget that MySpace app’s go live in less than three weeks. Many of the current Facebook apps could easily double their userbases.

One thing nags me. I’m curious as to how SNAP managed to make $388,000 off of their 5.5 million Facebook app users in just three months. That seems a little high to me. I need more data on how they monetize to know whether or not this is real and sustainable.