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By comparison, Facebook Inc. generated more than $12 billion in revenue, and nearly $3 billion in profit, from its 1.3 billion users last year. I didn't realiz
by hurin 12y ago
By comparison, Facebook Inc. generated more than $12 billion in revenue, and nearly $3 billion in profit, from its 1.3 billion users last year.
I didn't realize Facebook had such a small revenue figure - could anyone explain their market cap in that regard? It's highly unusual.
- InclinedPlane 12y agoTheir market cap is based on fantasy (but which growing tech company's isn't?) Facebook's valuation is founded on the nebulous idea that somehow facebook's combination of tech talent and userbase will result in massive profits in the future. Meanwhile, facebook managed to game the IPO system deftly and extract a huge wad of cash from investors (and win a massive payoff to its early stage investors), it took almost a full year for the market valuation of facebook to get back to a state where the folks who bought in early to the IPO could finally pass their stock off to other suckers without taking a loss.
- onion2k 12y agoMarket cap is an estimate of future value. Investors believe that Facebook will continue to grow and provide services that generate more money than it makes now. Should they stop thinking that the value of the stock will fall, and, obviously, the market cap will contract. A company could have $0 in revenue and a $100bn market cap if people were convinced that in the future that stock will be hugely valuable.