MrBeast buzz risks being new media’s old story

by Jennifer Saba

YouTube sensation MrBeast, best known for beloved-by-kids viral videos in which he gives away bundles of cash, now wants some for himself. His business is seeking to raise maybe $200 million, Bloomberg reported on Wednesday, at an eye-popping valuation of $5 billion. Some advice for those too young to have seen this one before: an overpriced new media company is a pretty well-worn stunt.

MrBeast is an entertainment phenomenon. The twenty-something, whose real name is Jimmy Donaldson, created a hydra-headed influencer empire combining 2000s-era prankster series Jackass and talk show do-goodery like Oprah Winfrey. Videos range from the inane - like “$456,000 Squid Game in real life!” - to the heartfelt, such as “I saved 100 dogs from dying.”

With 368 million subscribers, he has the most-popular channel on YouTube. Amazon.com paid him $100 million to make a TV series for its Prime Video service. His outfit made $400 million in revenue last year, according to Bloomberg, implying a potential valuation of 12.5 times sales. As might be expected for a startup, that wildly exceeds dinosaurs like Walt Disney or even YouTube’s owner Alphabet, which trade at 3 times and 6 times 2024 revenue respectively, according to Visible Alpha.

MrBeast may command such a lofty premium because he threatens to disrupt Hollywood, creating an unstoppable persona whose value transcends the old media system of studios and the like. But that’s a familiar story told by newcomers since the internet’s dawn. Vice Media, for instance, went from bad-boy ‘zine to an entertainment darling valued at $5.7 billion in 2017. That was a punchy 7 times expected sales, judging by a Wall Street Journal report, a target it missed on the path to going belly-up in 2023.

Similarly, the irreverent BuzzFeed mastered the art of listicles before building a newsroom to challenge stalwarts like the New York Times. It went public via a blank-check merger in 2021 with an enterprise value of $1.5 billion. It’s now worth nearly a tenth of that. BuzzFeed’s downfall came in large part because of its existential reliance on Facebook to reach readers. When the social network de-emphasized its kind of content, the company couldn’t compensate. MrBeast is similarly vulnerable to YouTube’s whims. In that context, it makes some sense for him to try to bid for platform TikTok, however quixotic the push might be - even a stake would be a hedge. Otherwise, he may just end up the latest in a long line of media concerns to punk investors.