Facebook seeks Valuation between $10 to $15 Billion

It seems that 23 year old Mark Zuckerburg may be on top of the world as his company, Facebook, is seeking a valuation between $10 to $15 billion. Facebook is a popular on-line social networking site, boasting a user base of approximately 40 million people. Rumors have shown that Microsoft, Google, and Yahoo are all interesting in buying a piece of the firm. Earlier this year, Yahoo bid $1 billion, MSFT bid $1.3 billion, and more recently, there have been rumors of Microsoft bidding $500 million for a 5% stake. Interestingly enough, MySpace has a larger user base (around 50 million) and sold itself to Fox for $550 million in 2005. It's too bad that MySpace didn't wait a little - think of how much more money they could have received.

Even though Microsoft and Yahoo have already put in bids, don't rule Google out. Even though Google has an internationally popular social networking site in the form of Orkut, Google has expressed interest in Facebook. It would be very easy to imagine a syndication between Facebook and Google's AdSense.

However, it is plausible to think that Facebook may want to go Public. With a valuation of $10 billion, it would start at 1/4 the current size of Yahoo, with only room to grow. Some are even speculating that Facebook could even develop into an online Operating System, as many programs and widgets have already been developed. If this were the case, then Facebook would start directly competing against Google, Microsoft, and Yahoo.

Why Facebook profit will continue to grow:
1) Open Platform: Since publishing the facebook API earlier this year, more than 4,000 applications have been developed by Facebook. Free developers are always a good thing!
2) Large User Base: Facebook has over 40 million users, with the average user spending 3 hours a month on Facebook. Each user also posts detailed personal information about themselves, including hobbies, favorite movies, music, bands, sports, books, etc. Multiply all these factors, and you'll find that this is an advertiser's dream!
3) Network Effects: As the user base gets larger, more users will join in order to be connected to their friends. This poses an interesting barrier to entry for potential new entrants, as a smaller user base will make it harder for other social networking sights to grow to Facebook or MySpace's size.


Could Facebook be the next Google?