Facebook Worth $35 Billion?

Posted Mar 26th 2010 4:40PM by Tom Johansmeyer
Filed under: Google (GOOG), Apple Inc (AAPL)

Somewhere, someone is buying into a $35 billion valuation for Facebook, if it were to go public. I'm struggling with this. Let's be realistic. Google, Inc. (GOOG) has a market cap of $137 billion. Apple, Inc. (AAPL) comes in at almost $210 billion. Does Facebook really have 25% of the "goodness" (that hard-to-pin-down quality that translates to value) of Google? 17% of the goodness that is Apple?

That's a hard one to swallow.

According to Justin Byers, Lead Business Intelligence Analyst at Private Equity Data Center, the wide range of potential valuations reported – from $15 billion to $100 billion – should really settle in at $35 billion. He uses a 75% to 80% default discount for pricing options relative to the most recent round of preferred stock issued.

Byers explains:

The latest option filing that was filed in January 2010 priced the common at $16.17. If, and this is a big IF, we assume this price falls within a discount range applied to the pricing of some of the previous filings, this would bring the per share value of the latest round of Preferred Stock issued in May 2009 to $80.85. Using that share price and the total estimated fully diluted shares that we have calculated, this gives Facebook, Inc. a value of close to $35 BB.

Of course, there's a caveat ... there always is. Rather than put a stake in the ground, the analyst explains, that "we are simply throwing another hypothesis into the discussion of valuation for the company." Most recent Facebook valuation attempts have landed in the range of $11 billion to $17 billion.

Tags: aapl, Apple, goog, google, social media, SocialNetworking, valuation, Valuations

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Reader Comments (Page 1 of 1)

3-28-2010 @ 4:04PM

Mo said...

You've greatly undervalued Google in this article. For some reason, the dailyfinance quote is showing it valued at $137 billion, when every other source out there values their market cap at $178 billion.

3-28-2010 @ 6:59PM

Sheldon L said...

Clarity on Capitalization.

244 million shares is the public float, at $563 per share equals $137 billion.

The total shares outstanding are 318 million, at $563 that equals $178 billion.

The total shares in existence are not trading. This should give you an idea of how much dilution there can be as options are issued -- a lot!