Is Facebook worth $56 BILLION?

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What is Facebook worth?

Over 500 million users and growing.  Really they have no competition in their social network market.  You join, your friends join, and you post your photos and links for everyone to share.  You encourage your friends to join so you can keep in touch.  And family members.  You only need one site like Facebook, and since they've gained critical mass, it is unlikely anyone else can catch up.

The population of the Earth is over 5 billion people.  500 million people would only cover the US population and part of Europe, to put a little scope on it.  I think the number of Facebook users could easily double to 1 billion, and then double from there.  All these users checking in every day or so, a ready made market of people for companies to advertise to.  Facebook has created a market that comes to them on a continual basis, how great is that?

The article below notes a former financial advisor, Jason Bishara, who thinks that Facebook is overvalued at $56 billion.  It also states that Facebook might be holding off on an IPO because Mark Zuckerberg wants to keep more control over Facebook operations (and not have to answer to shareholders).

My opinion?

I don't know the value of Facebook, but I do know they have hundreds of millions of users and basically no competition.  They are not like Apple or Microsoft.  Apple makes cool products, but products that can become obsolete or that can have competition from other manufacturers.  They keep having to improve and create products to drive their sales.  Remember the Sony walkman?  Why wasn't Sony able to stay on top of the gadget heap?  Amazon is a great company but has fierce competition for selling online, and it will only increase with time.

On the other hand, Facebook is the de facto site for social networking.  Once you have created an account, linked to your family and friends, posted your photos, etc., you have built an online home for yourself and you are unlikely to move.  Even if you found a site you liked better than Facebook, you'd have to convince everyone else to move with you.  I think Facebook has passed the point where this could happen, barring any serious blunders on their part.  With personal and business online activities moving to Facebook, it just grows on itself.  Facebook will continue to find ways to market to and make money from this huge mass audience.  As long as Facebook remains a relevant place for people to interact socially online, it will remain the largest meeting place on earth, and the largest market of people on earth.  So what kind of pricetag can you put on that?

Link to $56 Billion article:

http://ca.finance.yahoo.com/news/BUYER-BEWARE-Facebooks-56-siliconalley-3260290297.html