Facebook IPO vs Ford (real world) Valuation Comparison
About 10 minutes ago (as I start writing this blog post at least) investors were able to buy into Facebook. At opening the price was estimated at $38/share which gives Facebook an overall value of $107 billion. Wait … let me say that again. That’s one hundred and seven BILLION dollars (insert into your brains if you will an image of Dr. Evil laughing). So, what’s obvious is that money in the real world has no connection to money in the tech realm. Here’s just a few statistics about Facebook: Q1 revenue – $1.058 billion Q1 net earnings – $205 million Members – 835,525,280 So let’s think about this for just a second. This means that each member is worth $128.06 if things go Facebook’s way and the value at the end of the day reaches $107 billion. Now if we look at what they earned from their members in Q1 (and I’m talking about profit here, not revenue) they earned $0.25 off each one in the quarter. Essentially this means that at the current rate they’ll make roughly $1 off each user per year so simple math tells us that the company is being valued at 128 years of profit. That’s right … 128 years
