Tuesday, May 15, 2012

Facebook Valuation: Worth $100bi?

I was just reading in the FT that Facebook has raised its price range before the IPO. If they get what they want, the company will be valued between $93bn and $104bn.

The final project of the Corporate Finance course I taught earlier this year at Cambridge asked students (split in groups) to value Facebook. The highest valuations were around $80bi and that, often, involved some heroic growth assumptions.

Aswath Damodaran has a nice blog post with his valuation of the company, with a figure aroun $71bi. People from FT's Lex column also has an interesting calculator that you can play out with on your own (not sure if it open to non-subscribers).

At $100 billion, if I could I would surely short Facebook from the second day of trading. It will be interesting to see what the first-day price change will look like.

Either people are true believers that Zuckerberg will pull out another magic cash-flow rabbit out of his hat or....

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