Why Is Facebook Worth $50 Billion? Check Out These Charts.

January 3, 2011 at 6:19 am PT

Nice timing from JP Morgan’s Imran Khan: The Internet analyst’s 2011 forecast is out this morning and leads off with the bull case for Facebook–the one Goldman just made with a $500 million bet. Here’s a condensed version, in chart form:

Facebook is really, really big. It doesn’t have quite the reach of Google and Yahoo yet. But it’s still growing–fast–getting very close:

Meanwhile Facebook has already eclipsed Yahoo in terms of total time spent on the Web:

And Facebook boasts a loyal user base. Half of them come to the site at least once a day:

And the rest of the Web is growing more dependent on Facebook. Check out the increase in referral traffic from the social network to the New York Times, Amazon and eBay. Google’s still much more important, but again, Facebook is growing fast, and will grow faster if its outreach program to big media works:

Tagged with: advertising, Amazon, eBay, Facebook, Goldman Sachs, Google, Imran Khan, Internet, J. P. Morgan, MediaMemo, New York Times, Peter Kafka, search, Yahoo

comments so far. Add yours.

Anonymous

So…uh…who evaluated Myspace in the past?

Boy, THEY sure were right then, too, huh?
http://www.marketingtactics.com/ davebarnes

Very interesting. Thanks Peter.
Google management must be nervous about those last 3 charts.
Facebook eating away at their main income stream.
And, Facebook is too large (in market cap) for anyone to buy it.
http://twitter.com/no1onsports Antonis Kon

Well yeah but…what in terms of revenue? For all its traffic it hasnt managed to increase its revenue…it would be nice to have a chart comparing yahoo google and facebook in terms of revenue also..
http://mediamemo.allthingsd.com/ PKafka

FB certainly doesn’t monetize nearly as well as Google or Yahoo, but it does in fact monetize. It is reportedly doing well over $1B, and that # will increase as ad dollars start to move there to reflect move of eyeballs (and that is happening already). But regardless, if you’re Google or Yahoo, the fact that Facebook doesn’t monetize as well as you do shouldn’t make you feel any better about the site’s rise, which comes at your expense, regardless.
http://www.dahowlett.com dahowlett

And how does 500 mill peeps playing silly games and poking each other translate into revenue? Oh yes – silly advertisers believing we’ll watch more of the crappy ads on Facebook. Let’s see if they feel the same way when comparing different ad method results.
Anonymous

Are these graphics suppose to support FB’s vaulation or prove that it is a bubble waiting to burst?

-Comparing its total minutes/user reach to Yahoo? And what is Yahoo’s current valuation and which way is that valuation heading?

-Showing the traffic that FB drives to sites THAT ACTUALLY SELL SOMETHING? Great! Zuckerberg will get a really nice Christmas present from Jeff Bezos, but otherwise this number is completely irrelevant for FB’s valuation.
Anonymous

Goldman’s “investment” is Ponzi Scheme at its best. It is simply a ploy to allow early employees and investors to cash out by shilling over-valued, over-hyped shares to rich suckers through this “vehicle”. Thereby, getting their money out of the company while avoiding an IPO which would open up Facebook’s dodgy financials for the world to see.

Bernie Maddoff will be sitting in his prison cell swearing a blue streak when he hears about this.
http://www.myspace.com/unihole Towelie

Exactly.
http://www.postlinearity.com gregorylent

how to tarnish your brand .. get goldman sachs involved
Anonymous

I almost never use Yahoo or Facebook
http://www.facebook.com/profile.php?id=699195267 Anonymous

Is Imran’s entire report available somewhere for download/ viewing?
http://martijnlinssen.com Martijn Linssen

The stats say 30% of FB users *never* visit the site, so that’s 150 million users less to shattergun ads at?

Do these 150 m even count as users as FB’s entire monetisation model is built on ads? If they never visit, does that mean they’re “dead”?

And why -oh why- are you still using US figures only? Over half of all FB users now live outside the US, no use at all using US stats and comparing those to each other

Even if FB had 500 million really active users, that would make $50 bln equal $100 bucks per user – that’s a bit steep don’t you think?

In 2009, GOOG revenued $23 bln in advertising – how much has FB done so far?
http://twitter.com/andrewboston Andrew Boston

An
Anonymous

The main question here is how can FB realise that valuation. With it’s reach and user data FB has a lot of options available and we’ll have to wait and see where they move next. For my money the easiest way to do this would be to get an ad network up and running. Why? a) incremental revenue to the ads onsite, b) they do not and should not want banner ads cluttering the page, c) based on the rich user data available marketers will pay more to run on the FB adnet than competitors – even with aggregated data providers current adnets won’t be able to compete. FB needs to work out if they start organically or by acquiring an existing ad network or yield optimiser. But I guess they may be sitting back and waiting for user opt-in legislation to settle down…
http://shyam.somanadh.com shyam

Could not have put it better. FB needs to get into the payments game, which, even as an obvious extension of what they do now, won’t be easy. But justifying such a valuation is impossible without it. That said, when the the IPO comes around it is almost a certainty that the current investors will make good on their money.
http://shyam.somanadh.com shyam

Peter, is there a source for the $1B figure other than the original story that reported it? I have been trying to see if that has ever been substantiated by two different parties, but it always points to the same leak.
http://mediamemo.allthingsd.com/ PKafka

Don’t know which one you’re referring to, but I think Brad Stone and
Bloomberg are fairly conservative about this stuff, and they went with $1.4
B earlier in 2010. Could be higher.
http://www.businessweek.com/ma.....page_2.htm
http://shyam.somanadh.com shyam

Can’t seem to reply to the actual comment, so posting here. Yes, the numbers all point to two Bloomberg reports (1.4 and now 2.0) and there is nothing else out there than these two and a lot of guesswork. Can’t really make a good call on valuation based on just that.
http://pulse.yahoo.com/_NDP3MOBHOVECOQMYZJ4NFY46GA Chris Owen

It’ll never monetise like Google because people on Facebook are there to look at their friend’s pictures. A substantial proportional of Google users are their with their credit card in their hand searching to make a purchase. It’s completely different.
http://www.pocketinfo.net Robert Latchford

Waiting for this car crash – this time let Goldman burn.
http://pulse.yahoo.com/_DHSY5X4KPF5IYFYY7JFJLEE5WU rm

According to the graph, the claim that over half of users visit daily is false. Only 38% do, and even if you include the “most days” group, that’s only 46%…still short of half.
fuj18

Exactly.
Nevertheless facebook is SNS, a user reach number close to the yahoo.
http://twitter.com/marcospereira Marcos Pereira

“Check out there charts” or how to lie with numbers?

There is alternative means for each of the graphs you show:

#1. Is impressive that FB grows from 48% to 70% of user reach, but it will not keep the fast pace when it reachs 80%. Is more hard to grow that speed when you are already too big like Google and Yah
oo

#2. So what? Are users playing games or using FB per se?

#3. Why not comparing with Google and yahoo here?

#4. Oh, nice, that means that traffic to nytimes.com from FB is just 1/5 of traffic from Google.

#5. Same as above.

#6. Same as above.

Conclusion: what is your point?
http://www.sendmoney101.com Susan

I love playing with GOOGLE…FACEBOOK & YAHOO ofcourse!! These websites have become part of my life..sounds crazy but very true..
http://pulse.yahoo.com/_7WI6QMUGZHGNBKRHXPCKJ5UPPY Rodolphe Mortreuil

I see NO adverts on Facebook since I use a combo Firefox/AdBlock Plus. I can’t believe I’m the only one as Firefox has a market share of about 28% (in Europe at least) so those ad view need to be tempered further.
http://twitter.com/xcelbusiness Helen Cousins

It’s useful to see the size of Facebook benchmarked against the other players and to see how relevant it is to other websites. Of course, size is no indicator of market value. Hype can be used to gain a high share valuation in the short term, as I discovered when researching today’s blog post “Facebook valued at $50 billion and other tall tales”. And the Goldman Sachs “secret” email to clients has certainly created hype. At the end of the day, Goldman Sachs would stand to get a large fee from an IPO, whatever value is placed upon Facebook.
http://twitter.com/Atomanalytics Alberto Roldan

A couple of weeks ago I wrote an article about business analytics trends for 2011 and mentioned how social media is changing the market place. These statistics reinforce my view that the accelerated paced brought on by social media is going to have an incredible change in the way that we do business.
http://pulse.yahoo.com/_QRW46TWW6ZSDMOBYL5BSPIM3LA Hugh Grant

How many Facebook user have jobs? LOL cross reference U6 (not the fake U3 “unemployment bs) and i bet more than half of FB users do not have jobs. Hence so much time on there. FB wont touch 50 bil in revenue for 20 years.
http://twitter.com/facebook_uk Socialfactory_

I have to disagree with you when you suggest Facebook and Google have both as much to claim for their worth. The key question is: Does Facebook make enough money to justify their valuation?
http://twitter.com/facebook_uk Socialfactory_

I have to disagree with you when you suggest Facebook and Google have both as much to claim for their worth. The key question is: Does Facebook make enough money to justify their valuation?

Why Is Facebook Worth $50 Billion? Check Out These Charts.

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