Is Facebook Really Worth More Than $100bn?

Posted on May 29, 2012 by Nikhil P Naik

The initial value of the social networking giant Facebook was at $104. Immediately, it joined the top 25 US public companies when it entered the stock market. However, many people ask whether it is really worth that amount. They ask whether that valuation poses a danger, that the company could distort the whole tech industry’s value and probably create the kind of blunder that led to the demise of the dot-com of 2000. Technology experts offer different opinion regarding this issue.

According to Keith Hunt, the managing partner of Results International, the opportunity for Facebook to grow at $200bn is minimal. For a company to be worth more than $100bn at a very early stage there should be huge growth opportunities. Hint fears that there looms a danger that Facebook might start to max out. There are various concerns on how Facebook’s revenue from advertising comes about since the advertising does not work when the social site is used in mobile devices. People are increasingly using the internet through their phones and other mobile devices. He thinks investors should wait for some time before investing in the company. He also thinks that it was a mistake when they paid a billion dollars for the tech company Instagram.

Ben Hatton, the managing director of Rippleffect adds that, Facebook will experience a lot of pressure to maintain the $100bn valuation or even go beyond. However, he does not see a threat like that of the dot-com bubble. According to him, Facebook makes a lot of money since it is a fantastic product, but trends change after some time. The future is unknown. Hatton agrees to the fact that the valuation was very high. It will be hard keeping to that level and even improve.

Also Read:
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Garry Byrne, the managing director of Reading Room says Facebook made a tough resolution. On one hand, the company has direct link to data, which will be worth in the future. Data is growing to be a dominant force in the currently increasing digital world. Therefore, Facebook holds a potential goldmine besides having little substantial assets. According to Byrne, this is what drives the valuation. One the other hand, the risk of another bubble is in existent. The risk comes when people assume that social media services are worth tones of cash when in reality, few have such stability and assurance like Facebook. Many people tried Google plus, but went back to Facebook.

Steve Richards, the managing director of Yomego agrees to the fact that Facebook’s value and model is different. It is all about the prospective value of the data they have. The IPO could bring in good news since innovativeness will be encouraged.

This post is written by John Lewis and he works at PriceCollate as a writer. You can visit pricecollate to find and compare various type of shoes at great prices.

About Nikhil P Naik

Nikhil Naik has a Master's Degree in Information Systems, and is currently working as a Software Engineer at Microsoft. He also loves playing cricket, listening to music, and traveling. Twitter Handle - @buzz_nikhil.

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