January 5th, 2011
I don’t know about you, but over the past 18 months I’ve really been impressed by how Facebook has become 500 percent more valuable. I mean, you can see the increasing value proposition everywhere on the site, right:
in May 2009, the company was valued at $10 billion. Last August, Facebook was valued at $27 billion and now it’s $50 billion — for a company with a reported $2 billion in revenue and negligible profits. IfGeneral Electric, with 2010 revenue of around $150 billion, traded at a similar multiple of revenue, it would be worth $3.75 trillion instead of $200 billion. Facebook is now considered to be worth more thanTime Warner, DuPont and Goldman’s rival Morgan Stanley.
Just last week, Facebook’s shares were said to be trading on a private-market exchange at a valuation of $42.4 billion. Thanks to Goldman’s imprimatur, Facebook’s value increased 20 percent virtually overnight.
After this, William Cohan makes a depressingly convincing case that for Goldman Sachs, valuing Facebook at $50B probably makes sense, even if it will only lead to tears for everyone else.
No comments yet, be the first:
