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That’s why it’s hard to reach that kind of valuation for Facebook – or maybe it should be “Faithbook” – by any down-to-earth valuation method. Reuters Breakingviews developed a valuation based on the trajectory seven years earlier of Google, another at the time unpredictable play on new uses of technology. Even assuming Facebook manages the same kind of success, we only made it to just above $80 billion – near the low end of the $28 to $35 per share that Zuckerberg’s company is slated to sell for (a figure that could yet go up).
Or consider it this way. Google is now worth about $200 billion. That’s twice the magic $100 billion number that may attach to Facebook. But the Internet search firm reported 10 times as much revenue and 14 times as much profit in the first quarter of this year.
It’s true that Google’s top line growth doesn’t match Facebook’s these days. But Apple’s does. Yet the iPhone maker trades at a market value about 12 times the profit analysts reckon it will make this financial year, according to Thomson Reuters data. Facebook, on the other hand, may go public at a valuation that’s 54 to 68 times this year’s anticipated earnings, Susquehanna Financial Group reckons. That dwarfs the multiple for pretty much any company that’s remotely similar.
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