Facebook to be worth over $40 billion dollars next year?

3As WSJ reported, Facebook will probably go public in 2011, once it has reached a year of $1 billion behind it in sales. So a bunch of investors were polled about what they think the market capitalization would be – The results came to be between $35 and $40 billion dollars!

Although, some brave analysts have even suggested that the amount would be $59 billion in 2011 (a market cap over 2 times bigger than that of Google’s in 2004), and up to $100 billion dollars by 2015.

Priit suggests that the time of poster-boy Google may soon be over. Replaced by the poster-boy Facebook. Over everything else, people want to communicate. And right now, nothing enables us to do it better than Facebook.

What do you think? Would you buy Facebook shares?

5 Responses

  1. Oliver says:

    That article is almost two years old, most of the points he brings out have been proven to be moot.

    Too much clutter? You can now hide everything you don’t like. I hardly have any clutter at all. Only things that botter me are the continuous “X became friends with Y” messages.

    The cool factor *might* be gone, but after two years Facebook is stronger than ever. I think the thing is that although it might not be cool anymore, but so many people use it that it has proven itself quite invaluable if you want to keep up to date with what your friends are up to.

    And niche social networks.. sure, for people who like niches. But for regular folk, there are no common interests that would unite them. Or rather that people don’t care so much about strangers that like ice fishing as much as they do but would prefer to connect and communicate with friends and acquaintances that they know from their offline life.

  2. Martin Raadik says:

    I believe, that facebook will continue grow on its current rate. Nevertheless, I found an interesting article claiming Facebook will die out.


    Interesting stuff

  3. Oliver says:

    I doubt people do a lot of work when they use Google. Most likely still their spare time – the difference is that they are not just browsing, they are looking for something specific. And if you can give it to them in the form of an ad – great!

    On the other hand if I see an AT&T ad on FB when I’m looking at pictures my friends posted… not really relevant. Sure, I might stumble upon something, but it’s not something I’ve been actively looking for. So that means that while I might click through, I’m not as likely to become a paying customer.

    When you talk about ROI, do you mean cash in pocket or just eyeballs or whatever other goals you’ve set? I’ve read that although FB Ads have an okay CTR, AdWords produces more paying customers. It’s an important distinction to make.

    But hey – I guess I’m just a social media skeptic and I’ve been wrong before. So I’m not saying it won’t happen, it’s just that I doubt it will be so straightforward and a walk in the park for FB as people make it out to be.

  4. Priit Kallas says:

    Thanks Oliver for the extensive comment. Now some thought about your questions. Google’s revenue a year before IPO was about the same $1,4B (http://investor.google.com/fin_data2004.html). You don’t have to get more aggressive with ads to increase revenue. You have to have new solutions as Google did. Even with old ideas, implementing AdWords type system, FB would make money and wouldn’t be much more annoying for users. As for Google’s “more than 21 billion from ads alone”, that is it, only about 4% of Google’s revenue is not ads.

    People like fun more than work so FB would trump Google any time. Think how much time went to TV. That time will mostly go to FB not Google. Other things to consider are the possibility of FB search and messaging clients to replace Gmail and IM tools. http://www.dreamgrow.com/social-media-replaces-email-and-im/

    As for the CPC and CPM prices, there is Adam Smith at work and self-regulating markets. We use Facebook Ads and AdWords both have a positive ROI for us. We change our bids according to the results we get so some arbitrary average number is not really important.

    Facebook is still young and so are all other social networking sites. I believe that SNSes will rule the web for some time to come but if it will be Facebook, Google or somebody else and the user experience of those sites is impossible to predict.

  5. Oliver says:

    The value of Facebook and how it will be “the next Google” has been discussed a lot lately. And until I see some strong reasoning that would suggest otherwise – I don’t see why that should be the case?

    Sure FB is popular and is constantly gaining popularity. Even to the rate of being the most visited site in Canada etc but how and where does this translate to money and not just hype? I don’t think Facebook has shown this just yet. Currently they have 400 million registered users which translates to about 20% of global web users. Now with these numbers they are planning on achieving a bit less than 1 billion USD revenue this year.

    Compare this to Google (more than 21 billion from ads alone) and it’s nothing. Where is this surge of revenue going to come for FB to outgrow Google? Even if they continue to grow their userbase, they are going to have to be more aggressive with ads and this is going to have a negative effect with user retention, I think.

    Another reason, I think that Google is and will be more effective, is the intent of their respective users. People browse FB as a pass-time, for entertainment. On the other hand people go to Google to find something, maybe even looking for some specific thing to buy. It’s much easier to monetize such a user which will keep the CPC higher.

    If you look at the CPM prices Facebook ad networks pay these days – I think they’ve gone from about 12 or so cents to maybe 7 cents in the last year or 6 months (for SocialMedia ad network). That’s bound to say something about the quality of the users and ads.

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