Chances of Facebook valuation of $100bn on stock exchange dented
Share auction values Zuckerberg's firm at $98bn -- a drop of 5pc on earlier sale
Published 17/02/2012 | 05:00
THE prospect of Facebook being valued at $100bn (€76bn) when it floats on the New York Stock Exchange later this year receded after the company's valuation declined at a share auction.
The Valentine's Day auction valued the company at some $98bn (€75bn) -- a drop of five percent on a similar auction last week, which valued it at $102.6bn.
Share sales in private companies expected to go public are common events, and previous such sales of Facebook stock have usually contributed to the hype around Mark Zuckerberg's company as valuations keep rising.
Last year Facebook's value jumped by 71.3pc, according to some estimates. Tuesday's auction, run by Sharespost, saw 200,000 fund units, each equivalent to one Facebook share, at a price of $42 apiece, compared with last week's sale of 150,000 shares of stock for $44 each.
SharesPost estimates Facebook has 2.33 billion shares outstanding, including stock tied to options that may be issued.
"The real test of a company's worth only occurs in the public market," said Lawrence Creatura, a Rochester, New York-based money manager. "It's like trying to forecast an athlete's performance by looking at historic statistics. Those can help you make an educated guess, but anything can happen on game day."
The valuation based on private-market transactions may change depending on the actual share count after the IPO.
As of December 31, Facebook had 117.1 million Class A shares and 1.76 billion Class B shares outstanding. There also are about 379 million restricted stock units that vest later, as well as about 259 million shares that may be issued if outstanding stock options are exercised.
At a valuation of $100bn, the company would trade at 26.9 times 2011 sales, more than five times higher than Google. (Bloomberg)