Facebook is now the third largest U.S. Internet business, behind Amazon and Google, according to a new Bloomberg report released this morning. Based on trading on secondary markets - Facebook is not yet a public company - the site's stock is now at $16, which would put its valuation at $41 billion. That's more than eBay ($39.3 billion), but less than Amazon's $74.4 billion and Google's $192.9 billion.Of course, none of this really matters until Facebook goes public.
This isn't the first time we've seen reports regarding Facebook's supposed valuation. In March, for example, The Wall St. Journal talked to several investors who were anticipating a market capitalization of $35 to $40 billion for the social network, given a 2011 IPO (initial public offering). Also interviewed by the WSJ was Lou Kerner a former analyst at Merrill Lynch and Goldman Sachs, who thought Facebook could be worth even more: $59 billion in 2011 and over $100 billion in 2015.
Later reports from Forbes in September of this year stirred the pot yet again, this time estimating Facebook's overall value at $23 billion. Others had previously estimated its valuation at $33 billion based on private share transactions. But excitement surrounding these claims was quickly met with reasoned backlash from 37 Signals' David Heinemier Hansson, who called the earlier reports "outrageous."
"The company has supposedly taken just under a billion dollars in venture capital and small secondary-market sales of stock," Hansson explained. "So the actual money that has changed hands is just 3% of the total valuation of the company," he wrote in September.
Not much has changed in the months sense. Or, in other words, minority investment valuations aren't real, as Hansson says. They're just interesting.
Similar "who knows?" sentiment is echoed today, in Bloomberg's own piece. It quotes Lise Buyer, founder of Class V Group, an IPO consulting firm in Portola Valley, California: "It could be a bargain at $41 billion," she said. "We won't know until it trades on the public markets." Exactly.
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