logo
  Join        Login             Stock Quote

What Is Facebook Really Worth?

 May 09, 2012 04:18 AM
 


(By Street Authority) In the summer of 2004, George W. Bush and Senator John Kerry were locked in battle, seeking votes for the upcoming Presidential election. Another major event was making the headlines that summer as well: Google (Nasdaq: GOOG) was preparing to launch the most important IPO of the decade, eventually choosing to price its shares at $100 each when the stock debuted in mid-August. The stock would hit $200 by the following spring, $300 by the end of summer, and $400 by that autumn, a little more than a year after the IPO took place.

[Related -Boost Your Dividend Yield]


 
Fast-forward to next week, and we'll be talking about the largest IPO of this decade: Facebook.

Facebook's IPO is scheduled for May 18, and based on preliminary pricing, will be valued just shy of $100 billion. That's nearly three times the value assigned to Google when it went public (and roughly half of what Google is worth today).

Should investors expect a sharp 300%, 15-month gain for Facebook, as was the case with Google? No way. That would value Facebook at nearly $400 billion, almost up to Apple's $530 billion valuation. And Apple is vastly more profitable now than Facebook will likely be five years hence.

Still, depending on where the stock opens, investors may still see solid upside -- at least according to a pair of analysts that have already come up with post-IPO price targets. Sterne Agee's Arvind Bhatia (who correctly predicted the sharp eventual pullback for Zynga (Nasdaq: ZNGA) before that IPO started trading) thinks shares of Facebook will settle in at $46. That's nicely higher than the expected pricing range of $28 to $35 a share. Wedbush Morgan's Michael Pachter thinks shares are worth $44. These analysts agree Facebook may be valued at close to $150 billion by the time the IPO dust settles. Here's why...

Sterne Agee
This firm thinks Facebook will irrevocably alter the online advertising market, just as Google did. The key factor: Facebook's 900 million monthly users, half of which log on daily. That kind of reach should enable Facebook to garner a growing slice of a growing pie. The online ad market is currently around $68 billion, but should reach $120 billion by 2015 -- a 13% annual growth rate.


Next Page >>12
iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article image3 US Updates Show Ongoing Growth

Three economic updates today provide more evidence that moderate growth endures for the US. The numbers du read on...

article imageBuy These Solar Stocks Before They Snapback

Sometimes the market hands you a gift. And it would be foolish not to take it. Thanks to general market read on...

article imageInvestors Are Even More Euphoric And Confident.

As noted on the blog last Thursday, even though the market had been down for three straight weeks, last read on...

article imageThe Butterfly Machine

There’s a phenomenon called the Butterfly Effect. One common quotation is “It has been said that something read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.