Morgan Stanley figured out how much YouTube would be worth if it were a separate company, and it's more valuable than Disney
- If Google-owned YouTube were a standalone company, it would be worth more than IBM, Disney or Comcast, says Morgan Stanley.
- The investment bank says YouTube's new music subscription service represents an opportunity to boost revenue growth.
If Google's YouTube were a standalone company, the world's dominant video-sharing site would be worth more than big blue-chip companies like General Electric, IBM, PepsiCo or Comcast, and would be roughly the same value as media powerhouse Walt Disney Co., according to investment bank Morgan Stanley.
In a note to investors on Friday, the investment bank concluded that YouTube is worth $160 billion, based on the firm's analysis of its business. Since Google has yet to reveal YouTube's financial performance, Morgan Stanley's sum-of-the-parts valuation represents only an estimate (the firm put a 7x multiple on its estimated 2019 revenue for YouTube).
But if that figure is even close, it underscores how the website that Google acquired for $1.65 billion in 2006 has grown into one of the most valuable media entities in the world. And it could become more valuable still. Morgan Stanley said YouTube stands to bank big money from subscription music.
YouTube managers announced this week that they plan to roll out revamped subscription services. The much ignored YouTube Red is dead and from the ashes comes YouTube Music Premium, a $9.99 subscription music service that enables users to watch ad-free videos.
In addition, YouTube has created YouTube Premium, which offers ad-free music videos, offline downloads, and YouTube's original movies and TV shows for $11.99.
Music rules the roost on YouTube
Brian Ach / Stringer
Brian Ach / Stringer
According to Morgan Stanley data, music is the most common type of content consumed on YouTube, with 36% of users turning to the site for music everyday, compared to 22% watching movies and movie clips and 20% watching TV show clips every day.
Every 1 million YouTube users who switch to a paid subscription instead of listening to music for free on the site will add 1% more revenue to YouTube's topline, Morgan Stanley estimates.
Of course, Google has tried its hand at music subscriptions before with little success, compared to streaming-music rivals, Spotify or Apple Music, the sector's leaders.
But even if YouTube's paid music service doesn't become the No.1 streaming service on the charts, the site is already a massive media entity in its own right.
A decade ago, some observers thought the giant media conglomerate Viacom, parent company of MTV and Paramount Pictures, would squash the then tiny YouTube in court, after suing the video service for copyright infringement. Not only did Google-owned YouTube prevail in that landmark case, but - based on the Morgan Stanley estimates - the video site is now worth more than 10 times Viacom's $12 billion market cap.
Here's how YouTube's $160 billion estimated value compares to the market capitalizations of some of the most well-known corporations:
- Google (including YouTube): $742 billion
- Disney: $155.3 billion market cap
- Comcast: $150 billion market cap
- Netflix: $141 billion market cap
- General Electric: $129 billion market cap
- Pepsico: $138.7 billion market cap
- IBM: $132.4 billion market cap
- Spotify: $26.9 billion market cap
- CBS: $19.6 billion market cap
- Viacom: $12 billion market cap
Get the latest Google stock price here.
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