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Report: Facebook Revenue Was $777 Million In 2009, Net Income $200 Million
- callmeed 16y agoSo, where the heck is this $50B valuation coming from? I know those are '09 numbers, but even with wicked growth, that's quite a P/E.
- svlla 16y agoit's called faith-based investing.
- michaelty 16y agoBrought to you by Goldman Sachs.
- aheilbut 16y agoThe user base is growing at something like 200% a year. In five years, they'll have over 32 billion users. Just figure out a way to make one or two dollars off each user...that can't be so hard, right?
- asnyder 16y agoUnfortunately there's a hard cap on the number of potential users in the world. There's about 7 billion people in the world right now, even if we're generous and suggest that 50% of the population are potential users you're limited to a 3 billionish maximum. They currently claim over 500 million active users, which means they're already at 1/6 of their maximum. Furthermore, the law of diminishing returns suggests that their growth will slow as they get close to their population limit. So unless they can figure out how to monetize those users in some significant way I can't see the potential for revenue being close to what the current evaluations are suggesting.
- aheilbut 16y agoIrony is no fun when it is explained.
- kondro 16y agoIronically that was sarcasm anyway.
- aheilbut 16y agoYou're right! I'm so terribly sorry for getting my words all confused. It's a great thing that HN has such sharp and savvy editors like you to set shmucks like me straight.
- kondro 16y agoYou're very welcome :-).
- asnyder 16y agoYeah, I figured it was, but I wasn't completely clear on it, so I commented.
- rms 16y agoOr is it pseudo-irony?
- kondro 16y agoIt's Alana Morriset irony.
- rms 16y agoThe same place as the magical $15B valuation Microsoft set way back when.
- m104 16y agoIt's a scam of the pump-and-dump variety, plain and simple. Look forward a few investors and investment banks making out like bandits and the rest getting screwed.
- alnayyir 16y agoCan anyone get profit/revenue to valuation ratios on pre-IPO Google so that we can do some more rational comparing?
- michaelchisari 16y agoAt it's highest, I recall Google's was around 100:1. This puts Facebook's at 250:1.
- nano81 16y agoCorrect me if I'm wrong, but it looks like you're using (rumored) 2009 income numbers with the Jan. 2011 valuation in your calculation. Income surely would have changed since then.
- michaelchisari 16y agoYes, that's true. Assuming 2009's valuation of 25 billion, that would mean a P:E ration of 125:1.
- grasshoper 16y agoYou're comparing their 2010 year-end valuation with their 2009 year-end net income... In December 2009, Facebook repurchased shares at $25 for an implied valuation of $11 billion. That's a 55 P/E.
- kondro 16y agoHow would this be rational? Facebook is not Google. Google's primary market (search) is nothing like Facebook's (personal communication).
- Pyrodogg 16y agoBoth of them market in advertising. The delivery method is different, but it's still advertising.
- JSig 16y agoMy place of employment currently allows users to surf Facebook, though it blocks many other sites. I wonder if the guys upstairs will one day pull the plug on FB when firing people is no longer an option to boost productivity. I wonder how much of a risk this scenario is to FB. There are a lot of un/der employed folks out there though.....
- patrickgzill 16y agoLet's say that they have quadrupled that, so $3.2 B revenue, and that they have greatly reduced their operating expenses (new servers, etc.) - so let's say they are making 50% net income, which would be almost impossible - that is still at best-case scenario $1.6 B a year, which hardly justifies $50B . Even the most optimistic growth targets are going to bump up against hard limits: people can't spend more than x hours a day online, there are maybe 5 billion users worldwide as a potential market. Unless the CIA is going to pay them a couple billion a year for data mining access (CIA's VC arm was an early investor) since we have all so nicely classified ourselves and our social graphs for "TIA" purposes, I can't see the valuation sticking.
- christophe971 16y agoAt least. Some numbers. NOW the debate is going to be fun, with some numbers to play with... So let's see... Google is valued at $195B, and had a profit of $6.5B in 2009. 6.5/195 => 0.033 Apple is valued at $306B, and had a profit of $14B in 2009. 14.0/306 => 0.045 Same ballpark. Now... Facebook is valued at $50B, and had a profit of $200MM in 2009. 0.2/50 => 0.004 Facebook over-valued in the long term ? Sure. In the short term ? It's the (speculative) market at work.
- sandee 16y agoThe average of both Google and Apple = (0.033 + 0.045)/2 = 0.039 Assuming a profit of 500M over a revenue of 2B , the valuation should be = 0.5/0.039 = 12.82B The valuation of Facebook is 3.9x over this, which does not look so bad !
- deleted 16y ago[deleted]
- spitfire 16y agoSo we find out the emperor has no clothes. Unsurprising.