Facebook’s Value Tops Amazon.com, Second Only to Google

Zuckerberg has plenty of reasons to laugh. About $82.9 billion of them. That’s how much his Palo Alto social networking company is worth on online private exchange SharesPos

Kleiner Perkins Caufield & Byers (KPCB) partner John Doerr, Amazon.com founder and CEO Jeff Bezos, Facebook CEO Mark Zuckerberg, Zynga CEO Mark Pincus, and KPCB partner Bing Gordon (l-r) announced a $250 million initiative called the sFund (Social Fund) on Thursday, October 21, 2010 in Palo Alto, Calif. Photo: KPCB/Flickr

Facebook Inc.’s valuation topped Amazon Inc., leaving the social-networking company behind only Google Inc. among U.S. Internet companies, according to the Bloomberg’s report.

“Facebook Founder and CEO Mark Zuckerberg now has plenty of reasons to laugh. About $82.9 billion of them. That’s how much his Palo Alto social networking company is worth on online private exchange SharesPost,” LA Times’ Jessica Guynn wrote.

Facebook’s value has jumped by more than 40 percent since mid-December last year, while Amazon Inc. shares dropped as much as 9.5 percent yesterday after a disappointing sales forecast, pushing its stock market value down to $75.2 billion.

Despite skepticism from many investors who say the stock is overvalued and warn of a technology bubble, investor demand for Facebook is soaring on the private markets as advertisers pay for the attention of a user base that’s ballooned to more than 600 million active users.

Ad spending on Facebook will more than double to $4.05 billion this year, according to researcher EMarketer Inc. The gains reflect the rising popularity of social media companies, which let users interact and carry out other tasks that were long unavailable, or only possible to a limited degree, on older Internet sites.

Facebook’s estimated worth surpassed that of EBay Inc., owner of the largest e-commerce market PayPal, late last year. It is still dwarfed by Google, the world’s biggest Internet search engine, which is worth $192 billion.

SharesPost, a marketplace for private company shares, bases value on such criteria as transactions, research estimates and venture-funding rounds. Facebook shares have sold for as much as $60 apiece on SharesPost this month, meaning some investors value the social-networking company at $136 billion.

However, the same Bloomberg also reported that a poll of global investors reveals that 69% of them think that Facebook is overvalued. Just 10% thought it was “properly valued” (and 4% thought it undervalued), while 17% had “no idea.” Bloomberg conducted the poll over the past weekend, and revealed the results yesterday.

“Those investing in Facebook, expecting it to be the next Google, might be in for some bad news along the way,” says poll respondent John J. Lee, a portfolio manager at PGB Trust & Investments in Morristown, New Jersey.

The Bloomberg poll shows that the Facebook deal has made investors uneasy about internet companies in general. More than half the respondents say the firm’s valuation signals the “beginning of a dangerous new bubble” in the market, while only 17 percent saw it as the foundation of a lasting boom.

“More than a bubble, Facebook is a manifestation of the rational excesses that only the financial markets are capable of when confronted with something without precedents and more importantly unexpected,” said Luigi La Ferla, co-founder of LTP Trade Ltd. in London. He added: “There’s too little financial information and track history to value the company like this.”

Last week Facebook Inc. said that it raised $1.5 billion in new financing led by Goldman Sachs. The investments included $500 million from the investment bank and Russian investment firm Digital Sky Technologies as well as $1 billion from Goldman Sachs clients overseas.

According to documents sent to prospective investors in that deal, Facebook plans to start reporting financial results by April 2012. The company will be required to make those disclosures by the Securities and Exchange Commission whether or not it has held an initial stock public offering.

At $82.9 billion, Facebook’s value has jumped more than sevenfold since March last year, when SharesPost introduced its Venture- Backed Index, featuring seven companies. Facebook is over $77 billion more valuable than the second-biggest member, Zynga Game Network Inc., valued at $5.7 billion. [via Business Week, Bloomberg LA Times and Fast Company]

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