Facebook Surpasses eBay With Estimated Value of $41 Billion??

the future is coming

Facebook Surpasses eBay With Estimated Value of $41 Billion

• 11/15/10 at 10:15 AM

Hours before Facebook is set to announce its Gmail killer, Bloomberg says the social network's latest valuation, based on the selling price of shares on SecondMarket, an exchange for privately held companies, makes it the country's third-largest online business after Google ($192.9 billion) and Amazon ($74.4 billion). Since Facebook has yet to go public, its forecasted revenue and worth in the public market is all still theoretical. Facebook, which expects sales of at least $1.4 billion this year, has called the figure "fundamentally speculative." But, hey, investors, don't let that stop you from playing pretend. [Bloomberg]

via nymag.com

I am posting this for one reason. As a public record of my incredulity that this is news. If FB has an actual IPO of even $4 billion, it will be wildly over-valued. $41 bln is not even in the realm of reality. That is just behind Ford (41.8) and ahead of Morgan Stanley (39.4) and a ton of other companies. See the list via Forbes.

This is a company that despite boasting 500 million users, has apparently still not turned a profit. I'm aware that it claimed to be "cashflow positive" about a year ago, but that's it. And really, how many more people do they think they can get to enlist? Based on whatever that number turns out to be, what is the ceiling on "cashflow"?

I'm not the smartest business mind, but I simply do not understand their business model. And as you may have guessed, I really don't see their value proposition either. That's why I quit over 6 months ago.

Anyway, with this post out in the ether, I can be called out as a foolish cynic if FB actually does make real money and achieves a market valuation of $4 bln or greater. (For perspective, Mazda is at 4.4 and British Airways is at 3.66.)