Facebook surpasses EBay to become Third US Web Company in valuation terms

Facebook Inc.’s estimated worth is now bigger than EBay Inc.’s valuation, making it the third- largest U.S. Internet business.

Facebook’s stock is trading at more than $16 on SecondMarket Inc., an exchange for shares of privately held companies, said a source familiar with the latest pricing data. Going by that share value, Facebook’s worth can be pegged at about $41 billion, more than EBay’s $39.3 billion valuation on the Nasdaq Stock Market(publicly traded).

Where Facebook stands among U.S. Internet companies:

1) Google Inc.(publicly traded)________________$192.9 billion
2) Amazon.com Inc.(publicly raded)  ___________$74.4 billion
3) Facebook_________________ $41 billion
4) EBay____________________$39.3 billion

The value of Facebook on New York-based SecondMarket Inc. has more than tripled in the past year, according to a source, who declined to be identified as SecondMarket doesn’t publicly release trading data.

SharesPost Inc., another private exchange, estimated Facebook was worth $40.9 billion last week. That’s up almost 50 percent in the past month, according to the Santa Monica, California-based company.

Facebook expects sales of at least $1.4 billion in 2010, up from about $800 million last year, according to a source.

The valuation is ‘Fundamentally Speculative’ as Facebook is privately traded (or closely Held) company. Valuations of closely held companies are less precise than those of their public counterparts because trading is limited to a smaller pool of investors and fewer shares are available. Facebook also doesn’t disclose financial information. In addition, all such valuation attempts are external attempts to forecast revenue or value the company; hence can be termed speculative. Right valuation for Facebook will be known when it starts to trade publicly (may be in a year or so).

But still, if Facebook’s growth in a short time, from a niche network to world’s biggest social network, where US people are spending most of their time, is accounted for then valuation doesn’t look very inflated; as in essence the world has not put its money on it. If an entity has in excess of 500 million people communicating and sharing on its platform; plus unabated support of people who can put money anytime; then more than focusing on “How it will make money” , one should focus on its growth plans. As if one has audience, getting a revenue stream or model is not difficult (And more than anyone, big players like Facebook are the ones who are going to crack it or buy it). --------

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