Facebook Inc. now is the third-most valuable U.S. Web company after passing eBay. The social network company is estimated to have a $41 billion value compared with eBay’s $39.3 billion valuation on the Nasdaq Stock Market.
Facebook’s stock is trading at more than $16 on SecondMarket Inc., an exchange for shares of privately held companies, said a person familiar with the latest pricing data, Businessweek reports.
The largest social network now only trails Amazon.com Inc., worth $74.4 billion, and Google Inc., valued at $192.9 billion, among U.S. Internet companies.
Back in 2007, Facebook Inc. was said to be worth $15.3 billion. Its valuation even dropped to $3.7 billion at recession’s peak, but it rose unstoppably ever since.
Facebook, previously vaulted past other Internet pioneers, such as Web portal Yahoo! Inc. and travel site Expedia Inc. But in September, the Financial Times reported that Facebook Inc. was worth $33.7 billion, based on secondary market transactions, while eBay, a publicly traded company, valued at $32.3 billion that time.
“There is certainly good cause for Facebook to have a tremendous valuation,” said Augie Ray, an analyst at Forrester Research Inc. in San Francisco.
He continued: “It has in fairly short order – just a couple of years – gone from being a very niche site to one where the majority of Americans spend a great deal of their online time.”
However, all these Facebook’s numbers and valuations have one thing in common – they’re not real.
The valuation doesn’t indicate what Facebook will be worth in an initial public offering, which could be years away, said Lise Buyer, founder of Class V Group, an IPO consulting firm in Portola Valley, California. “It could be a bargain at $41 billion – we won’t know until it trades on the public markets,” she said.
The value of Facebook on New York-based SecondMarket has more than tripled in the past year, according to the person, who declined to be identified because SecondMarket doesn’t publicly release trading data.
Valuations of closely held companies are less precise than those of their public counterparts because trading is limited to a smaller pool of investors and fewer shares are available. Facebook also doesn’t disclose financial information.
“We understand there is a great deal of interest and curiosity in our past and potential financial performance,” said Jonathan Thaw, a spokesman for Palo Alto, California-based Facebook.
“However, external attempts to forecast revenue or value the company are fundamentally speculative and should be treated as such. We’re focused on building our business to be successful over the long term.”
Facebook Inc. expects sales of at least $1.4 billion in 2010, up from about $800 million last year, two people familiar with the matter said earlier this year. Facebook may not have an initial public offering until 2012 or later, giving it time to focus on growth, the people said.
EBay, while still expanding, depends on its online marketplace — a more mature area than the social-networking industry, said Aaron Kessler, an analyst at ThinkEquity LLC in San Francisco. Analysts estimate that EBay’s revenue will grow 5 percent this year to $9.14 billion.
Facebook makes money from ads and a credits program, which lets people buy virtual items in online games. The company has attracted a lot of ‘big’ advertisers as McDonalds, Pepsi, Toyota, Nike, Coca-Cola, Adidas and etc.
Facebook’s users have increased by more than two-thirds since September 2009, when it had 300 million members. In March, the company surpassed Google as the most visited Web site in the U.S., according to research firm Hitwise.
At AdParlor Inc., which helps companies advertise on Facebook, some customers are spending $20,000 a day on the social-networking site.
Facebook lets companies craft campaigns to reach specific customers by age, location, hobbies and other attributes, making it more appealing to marketers. They’re also eager to reach all those millions of users, said Hussein Fazal, chief executive officer of Toronto-based AdParlor.