In a recent Wall Street Journal article as well as Mashable articles the speculation is running that Facebook could hit a valuation o$100 billion by the time they IPO the company as early as Spring of 2012. This number just amazes me. This would make Facebook more valuable than Hewlett Packard, Cisco Systems and Amazon.com at their current market values. Are we seeing a bubble ? Or are these new valuations real and sustainable?
Apparently the Facebook ad sales are going better than expected. The WSJ article states that “EMarketer estimates Facebook will have ad revenue this year of $4.05 billion, up from $1.86 billion last year” . They go on to say ” Wedbush Securities Inc. analyst Lou Kerner said Facebook warrants a bullish view because it is eventually going to take a much larger share of the Internet ad market, while its other lines of business are poised to grow quickly. He pegged Facebook’s profit margin—in earnings before interest, taxes, depreciation and amortization—at about 50%. He said Ebitda should be $1.95 billion this year, and he estimated the company’s value in the public market would be $112.9 billion.”
In addition WSJ reports that In the first quarter, 31% of all online display ads in the U.S. appeared on Facebook, almost double the share from a year ago, according to comScore Inc., a firm that measures how people use the Web.
Letus know your thoughts about the Facebook valuation. Below are the full articles for your review.
Read more: Mashable
Wall Street Journal
Post: May 18 by Warren Raisch