Expanding Markets Expand Facebook’s Value

by Todd Shriber

One of this week’s big news items was a CNBC report that social networking giant Facebook could see a valuation of $100 billion when it decides to finally go public next year. For those keeping score at home, that number is double the $50 billion that was being tossed around back in January when Goldman Sachs (GS) and other investors plunked down $1.5 billion for stakes in Mark Zuckerberg’s company.

As has been the case following news of Groupon’s plan to commence an initial public offering, there are opportunities to nitpick with Facebook. As Trader Daily noted last week, some investors may be cautious with Groupon since the company has posted more than $540 million in operating losses since 2008. For those intent on doing the same with Facebook, they can point to the fact that the company lost 7.52 million users last month, according to the Los Angeles Times.

Don’t get too carried away because, as the Times notes, the lost users were in the less-than-dynamic markets of the U.S. (6 million lost users) and Canada (1.52 million), where Facebook has been a known quantity for years.

We’re not going to say whether or not a valuation of $100 billion is warranted, but it might be fair to say that Facebook is more of an emerging markets story than it’s getting credit for. In rapidly expanding economies such as Brazil, Colombia, India and Thailand, Facebook is posting some impressive user growth, according to InsideFacebook.

It’s up to market investors to sort out if Facebook is really worth $100 billion (or more or less). But this much is clear: The company’s constantly climbing valuation is something to behold. Remember when Yahoo (YHOO) offered to buy Facebook in 2006 for $1 billion?

And here’s the fun fact of the day: Assuming that $100 billion is accurate, just 16, or one more than half of the Dow Jones Industrial Average members, have market values greater than Facebook’s based on Monday’s closing prices.

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