a company like FB would have very high profit margins, in the 25-30% range. with $1.5-2 billion in annual revenues, i'd value them around $14-17 billion. i'm laughing at the posters who said they're worth $1.5b or $2b. sounds like someone just made up a number out of thin air.
From what I have read, facebook is making money just like every other social networking company makes their money, ADS. I cant even recall the last time I clicked on an ad, anyway, in 2008 ads brought in about $300 million, in 2009 about $500 million and in 2010 around $800 million, now with over 600,000,000 people on facebook do people honestly think they can grow like they did the last 3 years, the answer is NO. Growth is peaking in how many users they have, they are not going to double or triple their growth rate the next year or 2, who knows if they ever will double their user base from the 600 million people they already have, I don't think its possible. There are 300 million people in the US and 600 million people on facebook I think everyone here in the US has signed up already. The only thing they can hope for is that the average user spend more time per day clicking through facebook pages. Remember when myspace was growing at a huge pace well that ended as soon as it started, they have been losing users for a couple of years now, it will happen to facebook as well, who knows maybe by the time they go public they will have lost a couple of hundred million users, then what???? Maybe in years to come it will be cooler to tell people you dont have a facebook page. New trends always pop up and old ones forgotten, this will be the case with this trendy 2.0 website, the hype only last so long. There is probably a new website coming out by some 15 year old kid that will some how revolutionize the web in the next 5 years.
GS will collect so much in fees over the years having facebook as a client, it doesn't really matter. I mean, nobody can really say how this company will be doing in 15 years. I have a fair amount of knowledge regarding social media and there's so many variables I wouldn't bother making a prediction about their future revenues... This company could be a steal at 50 billion. Their targeting could improve with the development of semantic algorithms that actually pull all the data off your profile. In that case, they could actually monetize their product more effectively than google, even though click through rates are abysmal at the moment. Not to mention facebook actually has more personal data than google and more traffic. In a best case scenario, they could easily be worth 200 billion plus. On the other hand, they could run out of steam, run into conflicts with govts., lose trust from the public, and a stealthy competitor could change the face of social media. They could also simply take too long to figure out targeting-AI/semantic aglos are still a fantasy. Again, its a worthwhile play for goldman eitherway.
No offense, but you don't really understand Facebook. You might be right regarding their overvaluation (see my previous post), but they could grow revenue a ton without increasing their number of users. They have yet to use any sort of targeting...the business end of the company is very much in its infancy. The model for these web 2.0 co's is to get traffic first, then monetize the traffic. They got the most traffic in the world. Thats not a trivial thing nor is it a fad that can just bust. They can hire the best talent to develop more sophisticated targeting to improve click through and conversion rates. They could literally improve revenue by 30X's without adding users.
U know what I would like to see? Something that did social media using a Wikipedia-like or even craigslist type model. In other words, intentionally NOT exploiting every last ounce of profitability. Keeping user data 100% rock solid. No intent and no desire to whore up the site with stupid targeted adds, slimy marketing campaigns, data exploitation, etc. A model that could make the founder 5-10M a year and pay people who run it well, but just leave it at that. Perhaps there is a craigslist/WordPress/Wikipedia type tech guy out there who in a few years is going to blow the doors of the Facebook slime-fest.
i remember when aol, yahoo, and myspace were everything and anything. the values put on free sites are nuts.
ad increase is what killed myspace. Hell people make an uproar when they change the layout, think of adding one more ad. I also highly doubt that people will pay for games or apps/widgets. The profit of all these sites is based on low revenue per user and a high user base, scalping if you will.
Agreed! I wouldn't be surprised to hear that people on facebook post something like, "just taking a dump. brb." It was such a great feeling freeing myself from garbagebook a year ago. What a waste of life that site is! Maybe some of the ET comedians can come up with potential facebook posts, so I can have some fun when I pass by my co-workers, and mess with them as they waste their minds glued to that slimy site? Last, I've overheard several say, "I need to make some trades in ___ and ___'s account." I walk by thirty minutes later, and you guesed it, no trades made, and they're glued to their laptops reading/posting facebook nonsense. Unreal! I'd love to see that site sink like the Titanic.
There's a quote that comes to mind that makes me remember why most of us will never get the Facebook phenomenon, rightfully so. "Dumb people talk about other people, smart people talk about things and intelligent people talk about ideas" Being a trader nullifies my mind as to why anyone would want to play on facebook also, but I guess the reality is that most people fall somewhwere in between that dumb and smart realm there. While I see myself far closer to the intelligent side of the equation, probably just like many of you all here, that don't really get the social networking thing either. Truthfully, until my girlfriend started working as online editor, for a major radio conglomerate, a few years back, only then did I start seeing the light more.