If Facebook's worth $100B, even a fraction of this makes INT worth a lot more than what it's trading today...patience!
Debra BlackStaff Reporter
It is everybody’s favourite parlor game: Guessing how much Facebook might be worth.
And investors and analysts alike are once more playing it with the latest report of the social network company’s financial health in a story in the Wall Street Journal.
According to the story, Facebook Inc. may now be looking at an initial public offering as early as the spring of next year.
Those who have seen the company’s financial records told the financial newspaper that Facebook is on target to exceed $2 billion in earnings before interest, taxes, depreciation and amortization in 2011.
That’s well above the projections Facebook circulated when Goldman Sachs Group Inc. and Russian investment firm Digital Sky Technologies invested in the company.
The recent numbers have got some people who are familiar with the company’s financial data suggesting the profit was growing fast enough to justify a valuation of $100 billion or more when it goes public next year.
According to the Wall Street Journal, the valuation guessing game was first triggered by Goldman and Digital Sky Technologies initial investment of $1.5 billion. Recently the company was valued at around $70 billion.
The seven-year-old Facebook, which has more than 600 million users, has yet to set an initial price for an IPO and a spokesman for the company told the Journal: “We’re not going to participate in IPO-related speculation.”
One of the company’s big strengths is the potential for advertising revenue. In the first quarter of this year 31 per cent of all online display ads in the U.S. appeared on Facebook — close to double the share from a year before, the Journal reported.
And ad prices are rising on the social network. Previously prices had lagged behind rivals. But in the first quarter ads cost 40 per cent more per click than in the previous three months, the Journal, reported citing an online ad performance firm.
Tech company analysts suggest Facebook will soon have a much larger share of the Internet ad market. According to Emarketer Facebook will have ad revenue this year of $4.05 billion, up from $1.86 billion in 2010.
In January, Facebook topped Amazon.com Inc in its evaluation, leaving it behind only Google Inc, which is worth $192 billion, among U.S. Internet companies, according to Businessweek.
Facebook was valued then at $50 billion. It’s estimated worth surpassed eBay Inc., the business magazine reported.
At the time of the evaluation, many high tech bloggers were skeptical about the $50 billion evaluation. According to a technology blog for The Telegraph, Goldman’s pivotal investment role — approximately $500 million — would likely be rewarded with a major role in the Facebook IPO when it happens and depending on how much equity is sold could translate into $100 million or more in money to the firm.