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"He pointed out Apple’s headquarters, then Hewlett-Packard and a number of other big tech companies, the individual explained. Then he pointed to Facebook and s

"He pointed out Apple’s headquarters, then Hewlett-Packard and a number of other big tech companies, the individual explained. Then he pointed to Facebook and said that it would eventually be bigger than all of the companies he had just mentioned, and that if I joined the company, I could be a part of it all." I know he has to sweet talk employees to join his company, but I can't see this ever happening. Right now Facebook has a valuation of about 80 billion, and a userbase of about 750 million. Assuming he can get the userbase to 1 billion, and assuming he could pass Apple (~200 billion evaluation), that would be $200 per user, when the service is free. I know they get money through advertising and other ways, but that seems kind of high.

BvS 15y ago
Revenues and market cap are losly related at best. Eg Apples revenue last year was around 60 billion while their market cap is currently around 330 billion (around 5.5 times). Facebooks revenue last year was around 2 billion so if this ratio stays (it probably won't) they would "only" need to grow to 9 billion in revenues and already be bigger than Apple. Besides I don't think it will be impossible for facebook to increase their revenues to tenth of billions once they provide display adds outside of facebook etc. (doesn't mean that I think it's likely but it's definitely possible once they really start focussing on monetization).
- eggbrain 15y ago
  The question becomes, once they start focusing on monetization, will people stick around the service for long? I think the Facebook brand has a neutral perception in the community at best, unlike Apple or Google, who have brands that people truly like. Facebook does not get users because they are Facebook (unlike Apple where people would buy whatever Jobs sells), Facebook gets users because it is where everyone else is. If they start to heavily monetize their service, and other services are available (Google Plus, for example), I don't think users are going to stick around solely for the Facebook brand.
  - gojomo 15y ago
    Depends on the monetization methods. Google turning on the revenue didn't drive people away, in either the original CPM or eventual CPC incarnations. In fact, extra results ranked by ability-to-pay (rather than other hypertext algorithms) can be uniquely valuable for many commercial searches; Google's AdWords monetization is thus often a boost, not a drain, on its attractiveness to users. If Facebook finds a similar revenue fountain — and their incremental deliberateness in monetization suggests they want to — look out, world.
- maigret 15y ago
  You almost defined the P/E - the price earning ratio. Usually, a stock is worth around the order of 10 to 20 times the yearly earnings of the company. If you take all AAPL stocks, their value is around 17 years of earnings. P/E can be higher when investors expect the company to grow in the next years and so soon generate more revenue. An example is Amazon with a stellar P/E of 94. Don't know how long they will sustain that.
gojomo 15y ago
Apple, founded 1976, first reached a $70 billion market cap after 30 years of operation in 2006 (roughly eyeballing it from stock price). Facebook, founded 2004, is now at a roughly $70 billion market cap from private transactions after 7 years of operation. It's not unthinkable.
- m__ 15y ago
  It doesn't really make sense to extrapolate future stock performance from past stock performance. The market says: If you consider all publicly available information, we think that facebook will earn its shareholders the present day equivalent of 70bn dollars. Apple will earn its shareholders 330bn. These numbers reflect expected future performance and expected growth is already priced in.
  - gojomo 15y ago
    Of course that's true as an outside investor working under the efficient markets hypothesis, which is hard to beat. But it's not how a principal like Zuckerberg, who can actually affect the valuation through strategy and recruiting, should view or portray things. And I'm not making an extrapolative prediction of Facebook's value, just reminding people that the idea of Apple as a $300B-plus behemoth is itself fairly recent, and required an at-the-time unforeseeable surge in value from its Facebook-like $70B valuation just 5 years ago. Thus rather than Apple providing an example of a height Facebook can't reach, as the great-grandparent post seems to imply, Apple suggests the opposite, that a $70B company can become a $330B company, in less time than pure faith in the market valuations might suggest. Finally, the $70B valuation is not a market prediction that the actual trading value of Facebook will remain $70B in the future: merely that $70B is the best consensus average from public information, weighted over all considered futures. Very roughly, maybe there's a 4/5 chance Facebook falls back to $10B, and a 1/5 chance it races forward to $310B. Voila, that risk-neutral average value is $70B. So, a Facebook of Apple's size is 'thinkable', and there's essentially no chance that $70B is its actual value after this all plays out.
    - m__ 15y ago
16s 15y ago
Every time I see someone cite the Facebook user count, it goes up by 100 million. Why is that? Edit: <Joke> At this rate, they'll have more users than there are people on Earth by the end of the year.</Joke>
- barredo 15y ago
  750M is the latest oficial user count as of FB-Skype integration
  - pearle 15y ago
    I am a Skype user and not a FB user and I have no intentions of ever using the FB product again (I deleted my account around 2 years ago). I wonder how many of those 750 are the same as I.
    - nbm 15y ago
      Facebook reports monthly active users - people who have visited the site in the last 30 days. You (and anyone else who hasn't visited in last 30 days) are not included in that number. Refs: http://techcrunch.com/2010/11/10/dear-tech-press-lets-cut-through-the-nonsense-and-focus-on-active-users/ http://techcrunch.com/2010/11/10/dear-tech-press-lets-cut-th... http://www.insidefacebook.com/2011/07/06/facebook-750-million-monthly-actives/ http://www.insidefacebook.com/2011/07/06/facebook-750-millio...
      - monopede 15y ago
        Given that some people have separate accounts for games, I wonder how accurately that number reflects the actual number of users.
        T-hawk 15y ago
        There's also accounts for people's cats, cars, bands, and loads of other silliness. So we can discount that claimed 750m some, but probably in the ballpark of not much more than 10%. And OTOH, perhaps Facebook knows this and already considers account-to-person dilution in figuring its revenue expectations.

BvS 15y ago

Revenues and market cap are losly related at best. Eg Apples revenue last year was around 60 billion while their market cap is currently around 330 billion (around 5.5 times). Facebooks revenue last year was around 2 billion so if this ratio stays (it probably won't) they would "only" need to grow to 9 billion in revenues and already be bigger than Apple. Besides I don't think it will be impossible for facebook to increase their revenues to tenth of billions once they provide display adds outside of facebook etc. (doesn't mean that I think it's likely but it's definitely possible once they really start focussing on monetization).

eggbrain 15y ago
The question becomes, once they start focusing on monetization, will people stick around the service for long? I think the Facebook brand has a neutral perception in the community at best, unlike Apple or Google, who have brands that people truly like. Facebook does not get users because they are Facebook (unlike Apple where people would buy whatever Jobs sells), Facebook gets users because it is where everyone else is. If they start to heavily monetize their service, and other services are available (Google Plus, for example), I don't think users are going to stick around solely for the Facebook brand.
- gojomo 15y ago
  Depends on the monetization methods. Google turning on the revenue didn't drive people away, in either the original CPM or eventual CPC incarnations. In fact, extra results ranked by ability-to-pay (rather than other hypertext algorithms) can be uniquely valuable for many commercial searches; Google's AdWords monetization is thus often a boost, not a drain, on its attractiveness to users. If Facebook finds a similar revenue fountain — and their incremental deliberateness in monetization suggests they want to — look out, world.
maigret 15y ago
You almost defined the P/E - the price earning ratio. Usually, a stock is worth around the order of 10 to 20 times the yearly earnings of the company. If you take all AAPL stocks, their value is around 17 years of earnings. P/E can be higher when investors expect the company to grow in the next years and so soon generate more revenue. An example is Amazon with a stellar P/E of 94. Don't know how long they will sustain that.

gojomo 15y ago

Apple, founded 1976, first reached a $70 billion market cap after 30 years of operation in 2006 (roughly eyeballing it from stock price). Facebook, founded 2004, is now at a roughly $70 billion market cap from private transactions after 7 years of operation. It's not unthinkable.

m__ 15y ago
It doesn't really make sense to extrapolate future stock performance from past stock performance. The market says: If you consider all publicly available information, we think that facebook will earn its shareholders the present day equivalent of 70bn dollars. Apple will earn its shareholders 330bn. These numbers reflect expected future performance and expected growth is already priced in.
- gojomo 15y ago
  Of course that's true as an outside investor working under the efficient markets hypothesis, which is hard to beat. But it's not how a principal like Zuckerberg, who can actually affect the valuation through strategy and recruiting, should view or portray things. And I'm not making an extrapolative prediction of Facebook's value, just reminding people that the idea of Apple as a $300B-plus behemoth is itself fairly recent, and required an at-the-time unforeseeable surge in value from its Facebook-like $70B valuation just 5 years ago. Thus rather than Apple providing an example of a height Facebook can't reach, as the great-grandparent post seems to imply, Apple suggests the opposite, that a $70B company can become a $330B company, in less time than pure faith in the market valuations might suggest. Finally, the $70B valuation is not a market prediction that the actual trading value of Facebook will remain $70B in the future: merely that $70B is the best consensus average from public information, weighted over all considered futures. Very roughly, maybe there's a 4/5 chance Facebook falls back to $10B, and a 1/5 chance it races forward to $310B. Voila, that risk-neutral average value is $70B. So, a Facebook of Apple's size is 'thinkable', and there's essentially no chance that $70B is its actual value after this all plays out.
  - m__ 15y ago

16s 15y ago

Every time I see someone cite the Facebook user count, it goes up by 100 million. Why is that? Edit: <Joke> At this rate, they'll have more users than there are people on Earth by the end of the year.</Joke>

barredo 15y ago
750M is the latest oficial user count as of FB-Skype integration
- pearle 15y ago
  I am a Skype user and not a FB user and I have no intentions of ever using the FB product again (I deleted my account around 2 years ago). I wonder how many of those 750 are the same as I.
  - nbm 15y ago
    Facebook reports monthly active users - people who have visited the site in the last 30 days. You (and anyone else who hasn't visited in last 30 days) are not included in that number. Refs: http://techcrunch.com/2010/11/10/dear-tech-press-lets-cut-through-the-nonsense-and-focus-on-active-users/ http://techcrunch.com/2010/11/10/dear-tech-press-lets-cut-th... http://www.insidefacebook.com/2011/07/06/facebook-750-million-monthly-actives/ http://www.insidefacebook.com/2011/07/06/facebook-750-millio...
    - monopede 15y ago
      Given that some people have separate accounts for games, I wonder how accurately that number reflects the actual number of users.
      - T-hawk 15y ago
        There's also accounts for people's cats, cars, bands, and loads of other silliness. So we can discount that claimed 750m some, but probably in the ballpark of not much more than 10%. And OTOH, perhaps Facebook knows this and already considers account-to-person dilution in figuring its revenue expectations.