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Facebook Shares Are Up 77% In Three Months - Here's Why

  • Release time:2010-12-15

  • Browse:3657

  •       Facebook shares are going for $23 a pop in a 100,000 share auction at SharesPost this Thursday. A private investor tells Forbes that's 77% higher than he paid only three months ago.

          Facebook's implied valuation on SharesPost is $43 billion.

     

          SharesPost isn't the only company cashing-in on Facebook-mania.

          A couple weeks ago we wrote about a new cottage industry of companies formed solely for the purpose of holding Facebook stock and then selling stock in those derivative companies.

          Why is Facebook hype so strong right now?

     

    Some ideas:

        * Tremendous user-adoption. The site now has well over 500 million uniques.
        * Revenue traction. Last spring, we heard Facebook revenues could cross $2 billion this year. Who knows where the projections are now.
        * Some very successful industries are being built on top of Facebook – group-buying and social gaming – and Facebook is collecting "taxes" on those industries. In social gaming, Facebook collects 30% PLUS marketing expenses.
        * Facebook keeps hosting press conferences for product rollouts and press keep attending them.

         

    Some reason hype shouldn't be so strong?

        * We have no real idea if Facebook revenues are actually near $2 billion. The company is private and doesn't have to report numbers to anyone.
        * Groupon and its clones buy lots of Facebook ads, and we don't know if group-buying is a sustainable advertising model. Some local merchants say it kills their margins.
        * Zynga and the other social game companies are desperate to find a way to live off Facebook. Google is supposedly building an alternative.

     

    Source from SFGate

     

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