Facebook Targets $96 Billion Value

Is Facebook really $96 billion?  Honestly I don't know because I haven't done any analysis as of yet but more than likely I would probably say no.  And her's why.


More than likely on a fundamental basis no matter what metrics you look at it Facebook will look pretty expensive.  Second in order to maintain such a lofty valuation Facebook will continue to have to grow at a rate that is likely to be unstaianable and unrealistic.


Via WSJ article here

• At nearly $100 billion, it would also rival the current market values of more established companies including Amazon.com Inc. and McDonald's Corp., and longtime tech giants like Hewlett-Packard Co., despite having a fraction of the revenue—or profit.
• Currently, the largest valuation for a U.S. company at the time of an IPO was United Parcel Service, in 1999, at $60.2 billion, according to Dealogic.
• Facebook's IPO will be a watershed moment for Silicon Valley, spawning a new generation of millionaires, and a handful of billionaires, including founder and Chief Executive Mark Zuckerberg, whose stake is worth as
• But while the social network is growing rapidly—more than 900 million people now use the site—there are questions whether its trajectory is slowing. Its revenue in the latest quarter rose 45% from a year ago, but fell 6% from the previous three months.
• "The bigger issue [with Facebook] is the core business," said Morningstar analyst Rick Summer. "There's still no good understanding for what advertisers are paying for."
• Facebook will narrow down a specific price before its first day of trading on May 18, by which time investor interest could cause bankers to raise the price even higher.
• With the pricing, Facebook is anticipated to raise as much as $13.6 billion, above earlier expectations of $10 billion. In a regulatory filing, Facebook said the company would seek to sell 337.4 million shares, with about half of those being sold by founders, employees and investors.
• Mr. Zuckerberg, who founded Facebook in his Harvard University dorm room in 2004, is selling 30.2 million shares in the offering that could pocket him over $1 billion. Facebook says he is selling to pay taxes on his stake in the company. He would be left with as much as $17.6 billion worth of shares. Mr. Zuckerberg will also control approximately 57.3% of the voting power of Facebook's outstanding stock following the offering.
• Morningstar's Mr. Summer said the only way to justify even the low end of Facebook's valuation would require the company to make $40 billion in revenue within the next six to seven years, while maintaining the same profit margins. Facebook's revenue in 2011 was $3.7 billion and profit margin was 27%.
• Morgan Stanley, J.P. Morgan Chase & Co. and Goldman Sachs Group Inc. are the lead underwriters. Bank of America Merrill Lynch, Barclays PLC, Allen & Co., Citigroup Inc., Credit Suisse Group AG and Deutsche Bank Securities are the other bookrunners on the IPO, in addition to which 24 firms are co-managers.