Why Facebook Could Be Worth $125 Billion

If Facebook goes public, what will it be worth?

Back in August, Fortune made the case that the giant social network could be worth $50 billion. Among the reasons: Facebook was cash-flow positive, had more than 500 million subscribers, was pushing into new businesses and was on track to generate more user visits than Google (GOOG).

Another report from Bloomberg said Facebook was worth about $25 billion late last year, based on how investors were valuing its shares on two private exchanges for venture-backed companies, though prices aren't made public.

Now, there's a new report out from financial research firm Trefis that pegs Facebook's value at $45 billion today. But Trefis says if the company can double its ad revenue per page, increase its page views by 50%, gain a 10% share of the search market and double its per-user revenue generated by games, its value could soar to $125 billion.

Do Your Own Forecast: Click on the Interactive Facebook Graph Below:

Those may sound like pretty big ifs, but Facebook may have what it needs to get there.

It just announced that it has come up with a way for marketers to sponsor your activities and the activities of your friends on Facebook. When you do something on Facebook, such as click on the "Like" button for a comment someone else made, it shows up in the News Feed. A company can now take your action, sponsor it and broadcast it to your friends.

Say you check-in at Coca-Cola (COKE). The company could pay Facebook to broadcast that to your friends, as a Sponsored Story.

But while advertisers would likely love this, it could also spark a backlash from Facebook users who don't want their actions getting monetized by Zuckerberg & Co.

Either way, investors are generally very bullish about Facebook's future. The company announced on Jan. 21 that it had raised $1.5 billion in new financing led by Goldman Sachs (GS). Along with Russia's Digital Sky Technologies, Goldman invested $500 million, while the firm's clients overseas invested $1 billion.

Facebook is likely to continue pushing the limits of monetization -- which could change the way advertising works on the Web. It could also put the company on the path to Trefis' $125 billion value.