By Sahil Patel
How much is YouTube worth? According to an analysis released by Jeffries Marketing, YouTube — the largest provider of ad-supported online video content on the planet — could be valued as high as $40 billion.
To be fair, that’s the high-end of the firm’s estimate, which believes the video site, acquired by Google in 2006 for a relatively paltry $1.65 billion, could be worth anywhere from $26 billion to $40 billion. This means YouTube is potentially worth more than Twitter, which is valued at $30 billion. (For additional context, parent company Google is currently valued at $400 billion and Facebook just crossed the $200 billion mark).
Jeffries’ report focuses on the growth of online video advertising and how YouTube fits within this world. The firm is pretty optimistic about former, predicting that the video ad market will rise to $17 billion by 2017.
That would be great news for YouTube, which commands a major chunk of the video ad sales pie. For instance, Jeffries pegs YouTube’s 2014 ad-sales revenue at $5.9 billion, a number that it believes will grow to $8.9 billion in 2016.
Other reasons Jeffries is bullish about YouTube include the site’s TrueView ad format, its recently launched Google Preferred program, and its adoption of third-party metrics such as Nielsen OCR and comScore vCE.
“With the most viewership by a wide margin (1B+ people each month), the best ad-tech stack, improving content, ubiquity of service (including new extensions onto the living room TV), and the skippable TrueView ad format, YouTube makes Google a top pick,” said Jeffries’ researchers in the report.
That said, before YouTube gets too full of itself, the researchers also noted: “AOL is a purer play in video and seen by traditional media as a better partner for premium short-form content.”
If you have a few hours and love reading about valuations and market figures, check out the full report, which runs for more than 70 pages.