In its new report on the short-form video market, Needham analysts offered their latest valuation estimates for the industry’s three key players including TikTok, Meta’s (META) Reels, and Alphabet’s (NASDAQ:GOOGL) Shorts.
Analysts estimate that TikTok is valued at approximately $218 billion, Reels at around $203 billion (17% of Meta (NASDAQ:META)'s market cap), and Shorts at about $206 billion (10% of Google's market cap).
"We project that the relative value of these 3 services will be impacted by who is in the White House next,” they added.
In 2023, US short-form video advertising spending increased by 10.4%, according to eMarketer. TikTok led the short-form video services with $15 billion in revenue, followed by Instagram Reels at $10 billion and YouTube Shorts at $8.5 billion.
Needham projects a 20% year-over-year growth in revenue for each service in 2024, which, if materialized, would boost TikTok's revenue to $18 billion, Reels to $12 billion, and YouTube Shorts to $10.2 billion.
"Based on Netlfix's current EV/2024 Revenue Multiple of 7.7x, we calculate that TikTok is worth $138B, Reels is worth $92B (8% of META's market cap), and Shorts is worth $78.5B (4% of GOOGL's market cap),” analysts noted.
In terms of monthly active users (MAUs), Reels leads with 2.35 billion, followed by Shorts at 2 billion, and TikTok at 1.8 billion.
Based on the average Enterprise Value to Monthly Active Users (EV/MAU) of $153, this values Reels at $360 billion (31% of Meta's market cap), Shorts at $306 billion (14% of Google's market cap), and TikTok at $275 billion.
Needham also highlighted engagement times for each service, with TikTok leading the pack at 53.8 minutes per day per user, followed by Shorts and Reels at 52 minutes and 35 minutes, respectively.