Has the market tanked?

[Clinton]

I've been doing some investigative journalism today and digging out Flippa's published figures. They regularly publish figures of dollar value of sales that went through their site. I don't believe those figures as not every site that claimed to have sold actually goes on to change hands what with all the non-paying bidders etc. And I'm not sure if some of them are counted twice when they are relisted. But these are the only public figures available, so let's look at them.

From July 2009 (when they started, albeit a running start from business already built up at Sitepoint), they provided a month-by-month breakdown of sales in the first year. Then, nine months into the second year, they claimed total "sales" of $50M which, when you subtract the first year's figures, gives you figures for the first nine months of the 2nd year. Extrapolation suggests they ended the year on $48.5M. Currently their Facebook page says they're at $72.8M. $72.8M - $50M (the publicly provided figure from 12 months ago) gives you the dollar value of sales for the last 12 months i.e. $22.8M.

The average per month has really dropped off. Is it because Flippa's average listing is a lower value than before or is it a general malaise in the marketplace (flipfilter, any comment?) One or two large sales in the previous year skewing the figures? Or is it my calculations?

	First Year	Second Year*	Third Year (05/11 - 04/12 )
Total	$13.64M	$48.5M	$22.8M
Average per month	$1.13M	$4.04M	$1.9M

*Extrapolated

Maybe the FB image is a bit old, but they'd need to be on circa $110M to match the previous year's performance and if they had passed $100M I can't help feeling we'd have heard about it. All the indicators are that in the last nine months the sales volume by dollar value has dropped to below 50% of what it was in the previous year. If so that's a very significant change.

What are brokers experiencing? How has business been in the last year compared with 2011 and 2010?

[mikeb]

The wayback machine is your friend for this - although it stopped capturing flippa around 9 months ago.

Figures march 11 on archive.org is 49million confirming a level of trade of 23 million for the last 12 months.

Google insights in the US also shows only modest growth in searches for the last year.

I suspect it has not tanked, just that after initial excitement it has hit a relative plateau

I suspect most big deals are not done on flippa - it is simply not a credible place to do business until and if it does more to verifies address and location of buyers and sellers for all but small sites as part of the process of allowing to list.

[David S]

Clinton, good work.

The problem with any privately held company is that you really don't get a lot of information and what you do get is not necessarily complete. When publicly traded companies report their revenues, you can be assured that they have been audited and that any adjustments have been made. Of course as we have seen time and again, even public companies can engage in fraud. Even where there is no fraud, a closer look often requires that the financial statements be restated, as was recently the case with Groupon.

What would be really interesting is to see complete numbers as to the number of successful auctions and the average size. Was the second year skewed upward by a few large sites that were sold on Flippa? If so, has that business shriveled up or has it simply moved to brokers and private sales?

Or are the bigger sales there on Flippa but the prices have continued to decline. From what I've seen in my practice, I think that there is still a lot of softness in the pricing since lenders continue to be sitting on their capital rather than making loans.

I'll be interested to see what others have to say.

[Clinton]

When publicly traded companies report their revenues, you can be assured that they have been audited and that any adjustments have been made.

I must stress that these are not Flippa revenues. Flippa have been known to refer to the figures as sales, turnover etc., but it's none of those. It's the volume of business that happened between sellers and buyers on the Flippa platform. In fact, it's not even a good indicator of what it claims because we don't know how the stats were compiled.

[Thomas]

Can't comment on Flippa, but this year has been pretty solid so far. In 2012 Q2 we've already done the same in $ sales as 2011 over the whole year. 2010 we weren't brokering at all.

I've seen a slight slowdown in quality sites lately, but that's most likely natural variation. Most brokers I've spoken to seem to be doing quite well.

[Andrew]

What's going on here Clinton?! First I see a "Follow on LinkIn" button on this forum then I read you're on our Facebook page ... are you going all social on us? Next thing we know you'll be on Twitter ... ;-)

We updated how we calculate our total sales figure about a year ago. I like to think we adequately explained how we calculate it at http://experienced-people.net/forums...1536#post21536

We're also not so secretive on our annual sales stats. Check out https://flippa.com/about

Otherwise I'm with meathead1234 - we're continuing to see growth across all segments (despite annual seasonality), we're typically seeing more than 2,000 listings active on Flippa at any given stage and there continue to be amazing sites in that mix (by whatever definition).

I guess we'll see in a year from now as to how correct this is.

[Clinton]

Thomas, is there any chance that extra activity in 2012 is more as a result of you going full time into brokering recently rather than an increase in market activity?

As the owner of a forum geared towards website buyers and sellers, I'm hoping you and Andrew are correct and interest isn't tanking!

Andrew, thanks for chipping in. I saw the about page you linked to, but it doesn't seem to add anything on the finances beyond what I've already said. There is one claim there of $31M and no date to it. From your post it appears that you're seeing an increase in listings, but my revenue calculations in the OP suggest you're seeing a sharp drop in the dollar value of business done on Flippa. Is it the case then that fewer higher value sites are being sold on Flippa compared with last year and the bulk of your increased listings is at the lower end of the market? There's nothing wrong in that but it would indicate some change is afoot.

By my calculation, in the last financial year you enabled roughly $45M-$50M in business and are headed now for an equivalent figure when your year ends (in a couple of months) of between $25M-$30M. Would that be incorrect? To me the figures seem entirely possible even if the number of successful sales on Flippa has gone up.

Earlier I said

I don't believe those figures as not every site that claimed to have sold actually goes on to change hands what with all the non-paying bidders etc. And I'm not sure if some of them are counted twice when they are relisted.

Given Andrew's reminder of his previous post on the subject it does look like most of the abandoned sales would have been removed from the count.

[mikeb]

Copied from the "internet tycoon" thread - since has just as much relevance here...

Just to find the truth of "market tanking"

According to the way back machine - here are the "site sales" at a number of dates from flippas own website.
All figures $millions.

June 2009 : 0.233 - first recorded.
Mar 30 2010 : 33.993
Mar 28 2011 : 49.482
Apr 5 -today: 72.346

From which we can deduce turnovers...roughly april 1 to april 1
Added up in my head, so could be wrong.
2009-2010 33.993
2010-2011 15.489
2011-2012 22.954

So the numbers have not actually tanked... but 2010-2011 was poor after earlier euphoria..

[akirk]

I think that you might need more stats though to be accurate:
- surely some big sales skew the figures
- there are a number of different concurrent markets (big sites / small sites / etc.) - the markets will react differently...

Alasdair

[Clinton]

You're probably both right.

The rest of the market doesn't seem to have dropped 50% and the general gut feel I get at Flippa is that it hasn't dropped by 50%, but I've gone through the figures in the OP again and they are correct. The picture they paint could be skewed by earlier Flippa figures being calculated "differently". So, for example, if earlier published figures failed to correct for NPB and the sales that fell through, they could appear higher than they are.