The Companies Worth Less Than Facebook

http://larrycheng.com/2011/01/12/the-companies-worth-less-than-facebook/

by _pius • 16 years ago

34 38 16 years ago

larrycheng.com

togasystems• 16 years ago

NewsCorp?....well it is final....Facebook won

democracy• 16 years ago

on paper of GS & DST analytics they certainly did

noelchurchill• 16 years ago

I wonder what the Fortune 500 would look like if people were to guess at which companies were more valuable than others.

fleitz3• 16 years ago

That's pretty much what the stock market is and also the Fortune 500. It's all people guessing as to the future guesses of what a company is worth.

netcan2• 16 years ago

I guess the OP's comment should be reworded "people who haven't put their money in it"

nhangen• 16 years ago

I won't buy this until FB goes public and we see how it fares in an open market. Though I won't argue against the current valuation, I'm not sure I believe it yet.

netcan2• 16 years ago

Facebook shares are being traded quite a bit now. YOu could call it a semi public market.

sorbus• 16 years ago

"Public," in this case, I believe, includes the need for them to disclose earnings reports.

16s3• 16 years ago

Wow... neat list. FB is not more valuable than BMW, AIG or Nokia. There's just no way. And if it turns out that they are, then something is fundamentally wrong.

dantheman• 16 years ago

Why? I barely use facebook and it's more important to me than BMW or Nokia, and AIG should be out of business (but that's another argument). I assume facebook is more important to most people than BMW or Nokia, and though the value may be less per person it could be easily be more in aggregate.

16s3• 16 years ago

I would think that hundreds of years of engineering (mechanical and electrical) and solid products used all across the globe would be more valuable than a social website, but maybe I'm wrong.

dstein2• 16 years ago

It's important to note that stock valuations are derived from the expected future profitability of a company. Stock is a claim on future profits. Compared to a company like Halliburton, who has to build billion-dollar oil rigs before they make any profit, a technology company like Facebook is a lot more lucrative and thus its stock can inflate quickly if the profits expand faster than costs. And generally technology costs go down over time while profits increase exponentially. So you have a powder-keg scenario in Facebook if, and only if, they find a profitable business model based on their enormous userbase. And they better find that business model or the stock will crash like it's the year 2000.

fleitz3• 16 years ago

According to their PR they have found such a business model and are now profitable.

jerf• 16 years ago

"profitable" != dstein's "powder key scenario".

I will totally believe they are profitable, I do not believe that right this second they are bringing in enough to justify a $50B valuation on that ground alone.

arctangent• 16 years ago

History will tell whether this purported business model works out quite as well as their PR department promise.

As an aside, this article of Charles Ponzi makes for great reading ;-)

http://en.wikipedia.org/wiki/Charles_Ponzi

magicalist• 16 years ago

while stock valuations and expected future profitability are usually correlated (to some extent), if a company isn't paying dividends, wouldn't it be much more correct to say that stock valuations are derived from the expected future valuations of that same stock?

dstein2• 16 years ago

It's the same thing. If the company isn't paying dividends the stock price includes whatever dividends the company will pay out in the future. The value of the stock is the total value of all expected future dividends priced in today's dollars. And in Facebook's case investors think (or want you to believe) that the future profits will be pretty big.

sdizdar• 16 years ago

Market cap / valuation comparison is only meaningful if you compare companies in the same industry. For example, priceline.com has market cap of about $21B. In that respect, facebook valuation is not so high.

xenophanes• 16 years ago

Umm, no. Exactly the opposite. If the market caps in one industry were wrongly valued relative to another, then investment would move (b/c there would be opportunity for arbitrage and profit).

Why did you think the economy was divided into separate and unrelated sections?

americandesi333• 16 years ago

One of the major component of stock valuation is the expected growth of the company, which somewhat accounted for market and internal 'risk'. However, I would argue that in Facebook's case the risk is higher than what is used for this valuation. Therefore, I do not see Facebook being worth more then say Target.

phr• 16 years ago

I thought EMC bought VMWare?

dauphin• 16 years ago

They did, in 2001.

true_religion• 16 years ago

Facebook should use the same brilliant strategy that AOL did, and buy out a clearly sustainable big name company.

Maybe BMW, how about that?

The Companies Worth Less Than Facebook

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