In its new report on the short-form video market, Needham analysts provide their latest valuation estimates for the three major players in the industry including TikTok, Meta’s (META) Reels, and Alphabet’s (NASDAQ:) Shorts.
Analysts estimate TikTok to be worth around $218 billion, Reels around $203 billion (17% of Meta’s (NASDAQ:) market cap), and Shorts around $206 billion (10% of Google’s market cap).
“We expect the relative value of these three services to be influenced by who is next in the White House,” they added.
According to eMarketer, in 2023, spending on short-form video ads in the United States increased by 10.4%. TikTok led the short-form video services with $15 billion in revenue, followed by Instagram Reels with $10 billion and YouTube Shorts with $8.5 billion.
Needham expects 20% annual revenue growth for each service through 2024, which, if achieved, 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 multiple of 7.7x, we calculate that TikTok is worth $138 billion, Reels is worth $92 billion (8% of META’s market cap), and Shorts is worth $78.5 billion (4% of GOOGL’s market cap),” the analysts noted.
In terms of monthly active users (MAUs), Reels leads the way with 2.35 billion, followed by Shorts with 2 billion, and TikTok with 1.8 billion.
Based on an average enterprise value to monthly active users (EV/MAU) of $153, Reels is worth $360 billion (31% of Meta’s market cap), Shorts is worth $306 billion (14% of Google’s market cap), and TikTok is worth $275 billion.
Needham also highlighted engagement times for each service, with TikTok topping the list at 53.8 minutes per day per user, followed by Shorts and Reels at 52 minutes and 35 minutes, respectively.
