Facebook valued at US$70 billion

I'm still baffled as to how fb generates returns for its shareholders. I have no ad links on my page, so what is their money earner?
 
I don't really use Facebook anymore with all those stupid games, especially farmville. Don't see the attraction to that game. But where Facebook gets their revenue and how long it will last I couldn't really care less tbh.
 
BigAl-sa said:
I'm still baffled as to how fb generates returns for its shareholders. I have no ad links on my page, so what is their money earner?
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You must be using an ad-blocker then. FB is so full of ads, it's crazy!
 
Never been a massive fan of FB... and I'm aware that ALOT of people are stopping using the site as much as they used to... its losing its shine.
 
BigAl-sa said:
I'm still baffled as to how fb generates returns for its shareholders. I have no ad links on my page, so what is their money earner?
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Facebook has a lot of potential and I believe there is much still on the horizon. Its well placed to introduce its own online store, virtual currency, office tools, paid software distribution and many more value added services.

I don't think anybody investing into Facebook expects returns in the shortterm but are more looking at future prospects of their investments.
 
B.O.F.H. said:
Never been a massive fan of FB... and I'm aware that ALOT of people are stopping using the site as much as they used to... its losing its shine.
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True and I've also stopped using it, but there are still hundreds of millions of active users. It has a loyal base that will continue to use it. Facebook will never dissapear but it will need to be more innovative in the future.
 
Yeah at least 10 of my 15 year old friends ask how to get Facebook per week, and I also assist several moms and pops to get this Facebook. So really it's not going anywhere, and it's still going to make it's billions.
 
jes said:
Facebook valued at US$70 billion
GSV Capital invests in Facebook and the social-networking service is valued at US$70 billion.
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Hype? Bubble? Facebook is estimated to have $2 billion in annual revenue. I made a very aggressive financial model. To get a valuation of $70 billion it would require 57% revenue growth each year for the next 10 years. Where will that come from?

Well, not from subscriber growth, as population growth isn't high enough to support it. Will advertising revenue grow that rapidly? Are will it be some mystery product?

Personally, I think someone is smoking crack.
 
EtienneK said:
This social bubble is going to pop soon.
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Yep, my gut feeling is that this is vastly over-valued.
If MS bought Skype for $8 billion, and Skype has more real tangible assets and 500 million users, then FB can't really honestly be worth more than that.
And Social Media is fickle. People got turned off other social media platforms pretty quickly and their value plunged overnight. Look at MySpace.

I would be very wary of these figures.
 
Facebook makes money as a statistician's tool.

All of those 'Like' boxes spread across FB and the 'net? They're collecting stats on what you like and how your demographics agree with your decisions.

It's the same reason all of your info' on your profile is now variable - that's for a reason.

You're part of the biggest marketing database on Earth.
 
Garyvdh said:
Yep, my gut feeling is that this is vastly over-valued.
If MS bought Skype for $8 billion, and Skype has more real tangible assets and 500 million users, then FB can't really honestly be worth more than that.
And Social Media is fickle. People got turned off other social media platforms pretty quickly and their value plunged overnight. Look at MySpace.

I would be very wary of these figures.
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You've hit the nail on the head PLUS of course Skype does sell a service, so it does generate real revenue.
 
Personally Facebook got R6k from me last month for advertising and in return i made R11k
thats was a R5K profit and yes it was all just leads.

Once i wanted to promote gambling my ads was disapproved but noticed other gambling ads then i contacted them, before my gambling ads would be approved i needed to but down $30k upfront to promote gambling on facebook
 
dkhaley said:
Hype? Bubble? Facebook is estimated to have $2 billion in annual revenue. I made a very aggressive financial model. To get a valuation of $70 billion it would require 57% revenue growth each year for the next 10 years. Where will that come from?

Well, not from subscriber growth, as population growth isn't high enough to support it. Will advertising revenue grow that rapidly? Are will it be some mystery product?

Personally, I think someone is smoking crack.
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Not sure about your numbers... Assume Facebook has 2bn in Revenue and 1.5bn in Free Cash Flow to Equity (which, I agree, may be on the high side). Using a DCF approach with an annual growth rate of 10% (may be realistic considering the growth rate of internet users), a required Return on Equity of 12% you get an equity value just north of 70bn.

On the high side yes, unrealistic, not at all.
 
Tim182 said:
Not sure about your numbers... Assume Facebook has 2bn in Revenue and 1.5bn in Free Cash Flow to Equity (which, I agree, may be on the high side). Using a DCF approach with an annual growth rate of 10% (may be realistic considering the growth rate of internet users), a required Return on Equity of 12% you get an equity value just north of 70bn.
On the high side yes, unrealistic, not at all.
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I was assuming higher operating and capital costs, that were roughly based on Google's financials. It was the quickest "back of the napkin" approach I could think of. So for 2011, Google's cost of sales was 36% of revenue, and SG&A were 16% of revenue. Additionally R&D was 13% of revenue. Capex was $3.6 billion.

Granted, neither of us have access to FB's financial statements, and obvious that could make a huge difference. But to me $70 billion seems overly aggressive.
 
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