Could Facebook Be Worth $100 Billion by 2015?


For years, most people have assumed that Facebook, which recently surpassed 400 million users, would eventually go public -- delivering a rich payday to its founders and investors. In an interview in Thursday's Wall Street Journal, CEO Mark Zuckerberg (pictured) confirmed that intention but said he would do it on his own schedule.

Since launching Facebook six years ago in his Harvard dorm room, Zuckerberg has done just about everything on his terms. "We're going to go public eventually, because that's the contract that we have with our investors and our employees," Zuckerberg told The Journal, adding, "We are definitely in no rush."

Once the company does go public, it could see an immediate valuation of $35 billion, according to Journal reporter Jessica E. Vascellaro. That number could rise as high as $100 billion by 2015, according to the estimates of more bullish analysts. Google went public in 2004 at a valuation of $27 billion: Its current market value is over $135 billion.

First Revenue, Than IPO

Of course, more immediate than an IPO is the issue of bringing in revenue, and after years of hearing the familiar refrain -- "Yes, but how will they make money?" -- Facebook finally looks poised to generate some meaningful scratch: $1.2 billion to $2 billion, to be exact, according to sources cited in the piece.

That's even more than the $1.1 billion bandied about recently by Inside Facebook, a blog obsessively devoted to covering the social networking phenom. As the site points out, Facebook has been roughly doubling its revenue each year -- and given its wild growth, that trend looks likely to continue, for a few years, at least. Eventually, as other "it" firms such as Google (GOOG) have learned before, the rate of revenue growth has to slow down as the company matures.

Then there is the question of Facebook's current worth: Valuation is a notoriously difficult number to nail down for any private company. Estimates ranged downward during the recent recession, but appear to have glided back up toward $15 billion -- which was the company's value when Microsoft (MSFT) invested $240 million for a 1.6% stake. Of course, as All Facebook points out, Facebook is private and its shares trade on illiquid markets, so it's difficult to come up with a precise number.

Getting Serious

Facebook won't truly have a reliable valuation -- other than in its investors' minds -- until the company goes public. And while many of Zuckerberg's admirers may have hoped to see him ring the bell at the New York Stock Exchange wearing his trademark T-shirt, jeans and sandals, they're likely to be disappointed. Zuckerberg ditched his casual threads in 2009 for a more business-appropriate button-down shirt and tie.

As the economy improves and Facebook begins to generate serious revenue, Zuckerberg will undoubtedly face increasing pressure to take the company public. Board member Jim Breyer has said there will by no IPO in 2010. However, by early 2011, the pressure will surely have mounted considerably, especially if the stock market heats up.

And what about that estimated $100 billion valuation by 2015? It's certainly a bullish prediction -- but if the company keeps doubling its revenue every year until then, it's certainly not out of the realm of possibility.

Meanwhile, Zuckerberg is in the driver's seat: He owns 25% of Facebook and controls three of its five board seats. Wall Street clearly wants a piece of his company -- but Zuckerberg, and only Zuckerberg, will get to decide when he'll accept that friend request.