Following the release of Facebook’s financial details last Wednesday, analysts have been giving different valuations for the world?s largest social website that vary from $50 billion to $125 billion.
According to reports, Facebook has been growing rapidly since the last few years. Whether it is an accelerating growth or a decelerating one is a question that needs answering. The company made profits to the tune of $1 billion in 2011 compared to $600 million year before.?Facebook posted revenue growth of 88% in 2011 and 154% the previous year which shows the social network is experiencing a decelerated growth.
Many analysts suggested the world’s most popular network is worth $100 billion.
If the company were to be valued at $100 billion it would mean that Facebook is worth 53% of Google. Francis Gaskins, president of IPOdesktop.com, pointed out that?Google, as of now, is posting profits 10 times higher than Facebook. He also dismisses suggestions that Facebook is worth more than $50 billion.
Facebook shares are to be issued in the market in April 2012 but have been valued at $29.73 per stock giving it a total valuation of $74 billion, considering the total number of stocks that is 2.5 billion. This calculation was done at a time when the stock market was in a downfall and Internet companies were struggling. Now at private market places it has been valued at around $32-$33 per share with a total valuation of approximately $81 billion.
Some optimistic analysts suggest revenues will increase from $2.1 billion in 2011 to $4.5 billion in 2013. According to Craig Huber, an independent analyst,?LinkedIn is a smaller social network company that trades 30 times its estimated cash flow, and in that case, if FB were to follow the same strategy it could be valued at around $125 billion.
Source: Wall Street Journal