Four short months ago, Facebook raised eyebrows when it was valued at $50 billion, based on a $1.5 billion investment from Goldman Sachs and Russia's Digital Sky Technologies. Now, people with knowledge of Facebook's closely held finances tell The Wall Street Journal that the social networking giant is on track to exceed its 2011 target of $2 billion in pre-tax income, and could easily be worth $100 billion or more. Is Facebook really worth more than Amazon and Cisco?
These numbers are dubious: Despite Facebook's impressive earnings, some "early investors are trying to cash out" now, worried that the company's valuation has inflated too quickly, says Ryan Tate at Gawker. It wouldn't be surprising if these same pessimists are trying to talk up the price of their private shares first — "classic bubble behavior."
"Facebook is supposedly worth $100 billion"
Facebook is sitting on gold: These unfair accusations of "'bubble-like' talk" have been hurled at Facebook believers for years, says Nick O'Neill at All Facebook. But "everybody I talk to now is practically convinced that Facebook will become as big as Google," which is valued at $175 billion. In fact, Facebook's fledgling ad business will likely crush Google's AdSense platform in a few years. Most website owners are already giving Facebook "the keys to a massive vault."
"Facebook's $100 billion valuation doesn't sound stupid anymore"
It's all speculation till the IPO: When investors buy small stakes in privately held companies like Facebook, "the numbers put forward are always mind boggling," says Emil Protalinski in ZDNet. In the last value-setting transaction, a mere 100,000 Class B share pushed Facebook's valuation up to $80 billion. So is $100 billion plausible? Sure. But until Facebook goes public — which will probably happen next year — it's all speculation.
"Facebook growth exceeds expectations, $100 billion valuation justifiable"