Is Facebook overvalued (already)?

David Heath
Wednesday, 30 November 2011 11:04

IT Industry - Listed Tech

Just about everyone you ask has a different opinion on the 'real' valuation of Facebook; some even seem to have multiple opinions!

take a look at this chart.  The folks at SharesPost have attempted to ascribe a value for Facebook based on the various private placements of shares over the past couple of years.

Following a steady increase in value from (perhaps) $US5B in August 2009 to $US60B around a year later, there was a sudden peak of around $US150B in the first week or two of 2011.  This was followed by an immediate drop back to $US80B which held steady until August.  Since August there has been a clear steady and slow decline with an estimated value of not much over $US70B at the moment.

Let's give these valuations some context.  Goldman Sachs is currently trying to sell shares in Facebook with an implied valuation of $US50B and at the same time, we hear of another investor (reported information is behind a paywall) offering to buy Facebook at $US55/share (implied valuation $US124B).

Theories abound as to whether such outlandish buy offers are from those who bought in at the very peak and are trying to boost the price by buying small parcels prior to dumping a much larger parcel.

Wall Street Journal claimed yesterday that Facebook is targeting an IPO in the second quarter of next year to raise $US10B with an implied company valuation of $US100B.  The general lack of surprise amongst financial commentators suggests they already knew about it.

Generally it seems there are three factors that are adding haste to the IPO.