Testament to the human capacity for optimism, the financial world is increasingly bullish about Facebook. And the company itself – based on the newly hiked price at which it will float on the stock market at the end of the week – estimates its worth at $100bn or more, bigger than such stalwarts as Disney, Ford and Kraft.
There is some method to the madness. After all, Google's $85 launch price soared to $600 in just three years. And Facebook, with 900 million users worldwide and a profit of $1bn last year, is twice as profitable now as Google was then.
But there is also a very real possibility that the internet industry's biggest ever initial public offering is also the mother of all bubbles. It is worth noting, for example, that Facebook's profits are just 1 per cent of its putative market value. Its revenues have also recently dropped. And it is yet to work out how to make money in the fastest-growing mobile market. Investors take care.Reuse content