A new report from CNBC - citing " people familiar with the
matter" - suggests that Facebook will go public next year with a
valuation north of $100 billion.
The value of Mark Zuckerberg's social networking company continues
to rise - just six months ago, Goldman Sachs
in the firm at a valuation of $50 billion. Then, the investing firm
at the $65 billion level. According to CNBC, the most recent
transaction on SharesPost, a platform for trading shares in
companies that are still privately held, saw 100,000 Facebook
shares trade for $3.4 million, suggesting a total value of $85
Can a company where user base growth is
really be worth so much?
There are reasons to suggest that it can. Facebook, after all,
represents the world's largest data-mining network, holding a
veritable Fort Knox of consumer information that is the envy of
marketing executives everywhere. It has the advantages of both
targeting ads precisely at users' self-defined tastes and using
each member's social network to spread offers and campaigns virally
Of course, Facebook is also benefiting from the buzz around other
initial public offerings, notably
's (LNKD) and the
flotation. Investor appetite for new web-based companies continues
to grow, but the supply of new IPOs remains constrained. In the
tech bubble at the turn of the millenium, small speculative
ventures went public as soon as possible, saturating the market.
The market now faces the opposite dilemma, with companies acting
far more cautious about their IPOs.
Facebook still has some challenges to overcome, including overseas
competition, slowing growth in its core markets and persistent
problems with privacy violation and
Still, of all the high-profile companies yet to go public, Facebook
clearly looks like the strongest candidate. With an incalculabe
store of data on nearly 700 million users, a pervasive cultural
presence and mass penetration in the youth market, it's hard to see
how this IPO could go wrong - unless the broader market sentiment
completely implodes in the next year.
In the David Fincher/Aaron Sorkin film
, hacker-capitalist Sean Parker quips that it isn't a million
dollars that's cool - it's a billion. How much cooler, then, will
$100 billion be?