Market Cap Per Employee: Instagram Hits $83 Million vs. Office Depot’s $23,000, New York Times' $130,000. WTF?
Facebook’s agreement to buy Instagram for $1 billion in cash and stock works out to about $83 million per worker at the photo-sharing firm, which reportedly employs about one dozen workers, and the deal gives the tiny start-up a value roughly equal to established companies that include the New York Times (NYT), Peet’s Coffee (PEET), Cooper Tire & Rubber (CTB), and Office Depot (ODP).
And who says we're in Internet Bubble 2.0?
Instagram’s founders Kevin Systrom and Mike Krieger, along with investors who bankrolled the firm, are the ones expected to reap the windfalls from the sale. Employees just did the work. And the startling takeover price per employee shows, in the extreme, how the value investors place on a day’s labor can vary so dramatically in today’s economy. Instagram’s web site says it’s hiring engineers and designers, the sorts of people who could develop apps like the firm’s mobile photo-sharing-and-editing software. Only dudes with $83 million worth of talent need apply.
Other companies valued at close to $1 billion, meanwhile, garner far less value per worker:
New York Times Co., which employs 7,273 as of December 25, 2011, is valued at about $130,000 per worker, even though it arguably boasts the most skilled group of journalists in the world. Thus an Instagram worker developed value of 638 times that of each Times employee, at current market caps. Go figure.
Peet’s Coffee, which employs 3,642 (just 811 of them full-time) at about 200 shops it operates, is valued at about $261,000 per worker. Baristas worth twice what foreign correspondents are?
Cooper Tire & Rubber, which employs about 13,000, is valued at about $71,000 per workers.
Kaiser Aluminum (KALU), employer of 2,600, is valued at about $350,000 per worker.
Cal-Maine Foods (CALM), which employs 2,100 – 1,800 of them in the production of eggs – is valued at about $425,000 per worker. They must be some first-rate chicken whisperers.
Office Depot employs 39,000 workers, many at its 1,131 North America stores, and yet its market cap is only about $890 million. That gives it a value per employee of just about $23,000. Lemonade stand material.
The Andersons (ANDE), a grain merchant with 2,985 employees (1,295 of them part-timers), has a value per worker of $299,000. That’s a far cry from $83 million, but Andersons, in its 10-K, seems content with its workers: “Each position in the Company is important to our success, and we recognize the worth and dignity of every individual. We strive to treat each person with respect and utilize his or her unique talents.” The "Prairie Home Company" employer.
In case you’re wondering, the world’s most valuable company, Apple (AAPL), with a market cap of about $590 billion, had 63,300 full-time-equivalent employees, temps and contractors at September 24, 2011. The market cap per worker comes to about $9.4 million -- enormous, yet still dwarfed by the crazy price paid per-employee for Instagram.