David Prosser: Is Facebook really worth $50bn?
Saturday 08 January 2011
Outlook: Goldman Sachs' investment in Facebook is producing some fascinating nuggets of information. The investment bank has told clients who might participate in a fund-raising that Facebook had sales of $1.2bn and profits of $355m in the first nine months of 2010. That's as much detail we have ever had about its financial performance.
Do the figures begin to justify the $50bn valuation the Goldman deal puts on Facebook. Not on conventional multiples, maybe, but bear in mind that the company only went into the black in 2009. In other words, its financials are on a similar growth curve to its staggering user numbers, now at 500 million. Moreover, the valuation implies that each of Facebook's users is worth $100, not a princely sum given their engagement with the site and the information they offer up so freely. Watch this space.
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