[jacquesm]

The math goes something like 'expected customer lifetime value * number of customers'. Where the lifetime value is based on either some base assumptions about conversion to a premium product or some base assumptions about what they feel they can make of their users in terms of ad impressions or some other relatively low yield income stream. If this yields a huge number then everybody is happy.

This is further inflated by exits such as whatsapp and instagram, after all if they are worth that much then surely this other non-related product will be worth at least as much or more.

In the end, valuations have a pretty high random component and the perceived market can push that up or down tremendously.

Who even knows what drove this company to issue a warning like this, maybe one of their bigger customers is planning a take-over bid. It wouldn't be the first time something like that happened either.