If you thought Facebook’s stock may be astronomically priced, a new report from the Telegraph suggests that you’d be right as the company is now trading at twice the value of Yahoo! The company is also valued at a quarter of Google which generates 24 times as much revenue as Facebook does every year. If Facebook’s revenue were to double every year from now until forever, Facebook would surpass Yahoo’s current revenue by the end of 2012 and would surpass Google’s revenue by the end of 2014. That would be an aggressive forecast, to say the least.
However how did Google get to the point where they were generating $24 billion a year? In the company’s 2004 annual report, Google released numbers going back to 2000. Based on all public figured, Facebook currently looks like Google did in 2003, projected to generate approximately the $1.465 billion that Google generated that year. By the end of the following year, 2004, Google generated over $3.18 billion and had performed a successful public offering, eventually valuing the company at around $60 billion by the end of the year.
That means Facebook’s valuation appears to be tracking Google’s valuation almost identically. Whether or not revenue growth can continue at the pace that Google is unknown, however if Facebook were to mimic Google’s past, the company should file to go public next year. So far Mark Zuckerberg has dismissed such notions and some have even reported that Facebook will most likely hold off until 2012. Whenever it takes place, Facebook appears to be on par with Google which means that Facebook is setting the stage for a massive IPO.
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"If Facebook’s revenue were to double every year from now until forever, Facebook would surpass Yahoo’s current revenue by the end of 2012 and would surpass Google’s revenue by the end of 2014. "
Huh? Mind putting this in plain english? Are you saying that if FB's revenue doubled next year and again the year after, it would surpass Yahoo's?
Comment by Robert — August 26, 2010 @ 7:15 am
that is plain english.
if you take facebooks revenue today, and double it (i.e. this year if it made 1B, next year it makes 2B, the year after it makes 4B, etc..
the author is saying that based on this 'doubling' and based on facebooks current revenue for the year, it will make more than yahoo did this year (in 2012) and will make more than google did this year (but in 2014)
Comment by mistermister — August 26, 2010 @ 7:47 am
So what does it really mean for Facebook to go public? Would that really shake things up? Would it help our economy? In what ways would it be not so good? Just wondering…
Comment by Harper Jordan — August 26, 2010 @ 8:01 am
@Robert It means that if Facebook’s revenue doubled each year in 2010, 2011 and 2012, it would surpass Yahoo. If it doubled again in 2013 and again in 2014, it would surpass Google.
@Harper Typically when a company goes public, they get a big injection of cash from shareholders, a lot of early employees with stock options leave, and they get a lot more regulatory oversight. There are pressures for a company to go public because early employees want to cash out and sometimes the companies need the funds to expand. Microsoft basically was forced to go public because staff were trying to trade their shares in the company on the golf course.
Comment by Caitlin Fitzsimmons — August 26, 2010 @ 12:23 pm
Google provides a relevant service. FB is a spam hole. No one is going to pay for spam unless it's from the guy at the other end of the ad stealing your credit card #. FB is worthless. And of that 1 billion (doubt it), they still owe around 150 million for financing servers and other things. If they had the funds, don;t you think they'd be smart enough to pay CASH, instead of paying interest on a LOAN?
Comment by Guest — August 26, 2010 @ 12:39 pm
"If Facebook’s revenue were to double every year from now until forever" isn't plain english — it's shitty writing. ("…from now until forever"? Really?)
Thanks, though, for confirming that I'd read it correctly.
Comment by Robert — August 27, 2010 @ 2:01 pm
[...] I recently read about Facebook’s stock trading at a $33 billion valuation, I immediately thought to myself “How much is $33 billion?” Moments later, I emailed [...]
Pingback by 8 Outrageous Facts That Put Facebook’s Valuation In Perspective [Infographic] — September 16, 2010 @ 11:23 am
Dang, where do I go to get some of that Facebook sock…lol
Comment by Brock — September 16, 2010 @ 2:18 pm
Facebook generates a lot fewer ad clicks than most big sites based on the overal time spent there by the user base. They have the users (500 million, one in every 14 on the planet) but if the ads don't get clicked, the site doesn't generate cash. They just started making a profit in fall of 2009.
Will be interesting to see the frenzy leading up to their IPO.
Comment by bobola — October 16, 2010 @ 3:29 pm
"The company is also valued at a quarter of Google which generates 24 times as much revenue as Facebook does every year." — This is such a poorly structured sentence. I really had difficulty following this article.
Comment by McGee — November 16, 2010 @ 8:22 pm
This is NOT plain english – start with Net Income.
Comment by Ejay — January 27, 2011 @ 4:34 pm