Facebook IPO: is Facebook overvalued?
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Uploaded by NMAWorldEdition on Feb 2, 2012
http://www.nma.tv
Facebook plans to raise US$5 billion in an IPO that could value the company at US$100 billion. The eight-year-old company founded by Mark Zuckerberg could raise as much as US$10 billion with follow-on offerings.
A market cap of US$100 billion would make Facebook one of the most valuable companies in the world, on par with McDonald's.
The company sells highly targeted ads based on user-provided information. This helped Facebook earn US$1 billion last year on US$3.7 billion in revenue. By comparison, Google pulled in US$38 billion in sales and US$10 billion in earnings.
But on a price-to-sales basis, the market thinks Facebook is worth more. Does this mean the market thinks Facebook will win the internet?
Analysts expect Facebook's advertising revenue will grow just 52% to $5.8 billion this year and only 21% to $7 billion in 2013. That is still far behind Google.
What's more, Facebook is increasingly popular on mobile devices but doesn't display ads on phones and its capability to do so remains unproven.
Sales from virtual goods in games aren't much help either. Virtual goods produced just 12% of Facebook's revenue last year.
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Top Comments
All Comments (23)
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The crazy thing about Facebook is that people join up without expecting any kind of explanation of why they should join. I have never been able to understand from their non-member site just what the use of it is. Nor does anyone in the press seem interested in explaining it either.
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These videos are so funny they're like, "ching chong ding dong chang."
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'Asian fetish + kills own meat!'
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What a bad impression of mark zukerburg
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Hmm, is NMATV offering unlicensed investment advice now?
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youtube.com/watch?v=YyEkspWFPj
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I hate how a Harvard university students earns that lot of money by making a website. However I feel ok with Google because it's really good.
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Even more so now that we know about the "pink slime" McDonalds uses.
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Google allows porn, infact a large percentage of its searches are for porn, you can't search for porn on Facebook, that's why Facebook will never outdo Google.
BannedUfos 3 weeks ago 39
I love how the video ironically/intentionally ends with a facebook link
chiable 3 weeks ago 26