How Much Is Facebook Worth To You

I was reading that Facebook stock is now roughly (8/17/12) about $20 a share.

I was wondering what do you think is a fair value for Facebook? I’m sure a lot of you will say zero, but it must be worth a bit more than that.

I obviously know nothing about the market as I thought $30 would have been a good IPO start, but now I’m thinking about $10/share would be right.

What do you think?

You do know that share price means nothing without the context of how many shares there are, right?

Take a look here —>

FB shares are in freefall, with no end in sight.

When it went public at $38 I said I might buy some if it went to $20. I’ll probably keep an eye on it a little more closely now and buy around $15, if it goes that low.

That’s a cool graphic, but it doesn’t contradict my statment.

What’s valued more:

Company A: Stock is at $40, there are 1,000,000,000 shares
Company B: Stock is at $15, there are 100,000,000,000 shares

The situation is complicated by their weird staged insider lockouts. They both change the number of available shares several times, as well as providing several dates which practically guarantee buyers’ markets (i.e. way more people wanting to sell than to buy). So buying before those clear is riskier.

But looking past that, the closest approximation I can come up with for FB is Google – another company that doesn’t make it’s money directly off it’s end users, but rather off peripheral markets: advertising, taking a share of sales of products sold through their markets, etc.

While I don’t believe in the invisible hand (my motto is “almost everyone, everywhere, dramatically underestimates the effects of chance on almost everything”), GOOG has been on the market long enough that it’s value likely isn’t a completely random number. To bring FB into line with GOOG’s P/E and other stats at current share numbers makes the value of FB about $7/share.

Which isn’t to say that I’d buy it at that value: stock analysis isn’t my profession, and I don’t know FaceBook’s business well enough be an informed investor in it. So FB is a market for others right now, and given that thus far it’s value seems to derive from name familiarily and emotion rather than any actual business reasons, I’m content to leave it that way for the forseeable future.

I am shocked by the number of people that say it is worth nothing.

I think they are interpreting the question as “what are you willing to buy it for.” The OP asked what you think a fair value is, not what you are personally willing to buy it at.

Considering that it is a huge company that is making a profit, how can anyone think a fair value is $0.00?

ETA: There are 2.14B shares. They have ~$15B in assets, and ~$1B in liabilities. If they are only worth something because of their balance sheet, they would be worth ~$6.50 a share.

The media is doing a takedown or something. FB is worth something more than its current value and that will bear itself out once we dispense with the negative hoopla.

What are you basing that statment on? Did you click on Duckster’s link?

FB itself is worth nothing to me. Its stock is probably worth a bit under its current price.
And I’m enjoying the dive. You bastards who moved into my old office, take that!

Wow, three totally different questions.

  1. “How Much Is Facebook Worth To You” - the thread title.

  2. “What Is Facebook Stock Worth?” - poll title.

  3. “what do you think is a fair value for Facebook?” - OP.

The answers:

  1. Whatever it’s trading for, right now. (That’s also the answer to “what is FB stock worth to you?”)

  2. Fuck-all if I know. But if the hypothetical rich uncle gave me a block of FB shares right now, I’d be calling up a broker to sell them as soon as I finished typing this sentence. IOW, my WAG is that whatever it’s currently priced at, it’s more likely to go down than up.

  3. FB is worth $0.00 to me: I don’t own any stock in it, and while I have a FB page, I haven’t been there in most of a year.

My analysis:

First, let’s compare Facebook to Google. I actually wanted to try to compare it to, say, a network television studio because both have “viewers” in some sense that advertisers are trying to reach. But networks also make money on the programs themselves (and syndication rights), whereas Facebook has no equivilant product it’s trying to sell.

So both Google and Facebook are huge online presences. Both are trying to achieve money almost entirely through ad click-throughs. Sure, Google’s expanding into Fiber/TV (yay Kansas City!), but I’m actually going to compare it from June 2011 as that’s a date where I’ve got a useable stat from.

Google unique users per month as of June 2011: 1 billion.
Google stock price in June 2011: 495-530. Let’s call it 515 average.
Shares outstanding: 322.67 million
Total value for Google: $166 billion

Now, whether you agree with this obscene number or not, investors did. Considering that, at that point, Google had been public for 7 years it was a pretty stable commodity. So let’s work backwards.

Facebook: 24 million unique visitors per day or 720 million per month.
$166 billion * .72 = $120 billion
Now, I’m going to halve that evaluation for a few reasons

  1. Google can target ads based upon keyword search. Facebook can’t, which leads to lower clickthrough rates
  2. Facebook as a business has yet to develop a clear path on how best to place ads or, more generally, just make money

So a $60 billion company valuation and 2.138 billion shares of common stock outstanding.

That’s $28.06 per share.

Is that in any way, shape, or form the way you’re supposed to go about figuring out valuation? Yeaaaah, probably not. But I think my estimate’s reasonable :slight_smile:

So $28. Final answer. Locking in the vote.

What the hell do I know? I don’t know how to value a company.

I have chosen $1 to be where I would (theroetically) buy it on the basis that 2 billion shares and a database so big with so many potential links to be made has to be worth more than a dollar a person.

Somehow I don’t think most of these people are doing a discounted cash flow analysis or looking at P/E ratios.