Facebook could be worth $100BILLION by next spring as 'profits exceed expectations'

By DAILY MAIL REPORTER
Last updated at 10:31 PM on 2nd May 2011

Plenty to smile about: Facebook, founded by Mark Zuckerberg, is on track to make $2billion this year

Facebook is reportedly on track to earn more than $2billion in 2011, far exceeding forecasts made last year.

The leaked figures indicate the California-based company could be worth as much as $100billion by the beginning of next year, raising the possibility of it going public in the spring.

It would make Facebook one of the biggest technology companies in the world, overtaking Amazon and Cisco.

The information was released to the Wall Street Journal by people familiar with Facebook's recent financial information.

They told the newspaper it is likely to earn $2billion this year, before interest, taxes, depreciation and amortisation (Ebitda).

That estimate puts its profits far above the numbers Facebook released in January when Goldman Sachs and Russian investment firm Sky Technologies invested $1.5billion in the firm.

The terms of their investment implied it could be worth as much as $50bn. However, the Journal's informant said if the firm continues to grow at such a rate it could be worth double that by next year.

There has been much speculation as to when Facebook's initial public offering (IPO) will take place.

It refuses to be drawn on a schedule, but according to the Journal several large banks are in talks with the company about supplying a range of investment banking services.

CEO Mark Zuckerberg only founded Facebook seven years ago, but since then it has recruited 600million users.

Rapid growth: In the first quarter of this year, 30 per cent of all online display adverts were on Facebook, a much higher proportion than their rivals

Its rapid growth has fuelled a scramble among investors to buy shares in the company while it remains private.

Much of its success is down to its huge advertising revenue, which is predicted to hit $4.05billion this year, up from $1.86billion in 2010, according to EMarketer.

It has also made extra money from its own payments system, called Credits, for which it takes a 30 per cent cut.

The people who leaked the figures to the Journal were keen to stress it is difficult to assess Facebook's value, because it will depend on the economic mood at the time of its IPO.

But Lou Kerner, an analyst for Wedbush Securities Inc, said such a positive view was warranted, because it is still in the early stages of its advertising potential.

Powerful friends: Mark Zuckerberg's company has grown beyond recognition since he founded it seven years ago. Its IPO is much-anticipated

He predicted its value in the public market could be $112.9billion. Its value on the secondary market has fluctuated widely, but was last estimated to be $70billion.

He told the Journal: 'Part of our bullishness for Facebook is our belief that it is still in the embryonic stages of advertising.'

In the first quarter of this year, 31 per cent of all online display adverts in the U.S. were on Facebook. Their advertising prices, previously far below those of their rivals, increased by 40 per cent per click in the same period.

However it could face difficulties in the long-term because of its reliance on the Android operating system, run by its rival, Google.

There is little public information on Facebook's financial situation, and today a spokesman refused to be drawn on 'IPO-related speculation', the Journal reports.

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