January 07, 2011, 2:44 PM — It looks like a lot of those questions about Facebook's financial numbers are being answered.
A Goldman Sachs document being circulated among the investment firm's wealthy clients has been leaked to the outside world. And according to Reuters, it shows a company making $355 million in net income in the first three quarters of 2010 on revenue of $1.2 billion.
(Also see: Facebook edging closer to IPO)
Goldman's 101-page document (along with a separate, six-page financial memo) soliciting investors for a $1.5 billion Facebook offering was hand-distributed in New York just after lunchtime, according to Reuters.
The source who leaked details (and who had signed a non-disclosure agreement) said the documents shed little light onto how Facebook generates revenue.
I suspect we won't have to wait long to learn that.
Goldman, which last week invested $450 million in Facebook, is offering some of its qualified clients (net worth of at least $1 million) a limited-time offer to invest in the social networking company, with a commitment deadline of Friday (today). Facebook soon is expected to exceed 500 investors, which will require it to report financial results, even if it remains private. While the company previously had said it wasn't considering an initial public offering until last 2012, it was reported on Thursday that Facebook may launch an IPO in April 2012.
So do Facebook's numbers ($335 million profit on revenue of $1.2 billion over nine months) justify an estimated valuation of $50 billion? Let's do a quick comparison with three other companies: Yahoo, Amazon.com and eBay. And let's extrapolate Facebook's 2010 revenue to $1.8 billion.
Yahoo (NASDAQ: YHOO)
Estimated 2010 revenue: $6.4 billion
Current market capitalization: $22 billion
Revenue multiple: 3.44
eBay (NASDAQ: EBAY)
Estimated 2010 revenue: $8.9 billion
Current market cap: $36 billion
Revenue multiple: 4.04
Amazon.com (NASDAQ: AMZN)
Estimated 2010 revenue: $33 billion
Current market cap: $83 billion
Revenue multiple: 2.5
Estimated 2010 revenue: $1.8 billion
Estimated valuation: $50 billion
Revenue multiple: 27.8
That strikes me as a pretty high valuation, but Ryan Jacob of the Jacob Internet Fund, quoted by Reuters, thinks the numbers from Goldman Sachs implies impressive growth:
"This year you could make the case that they're probably going to be north of $800 million and probably close to a billion (in net income)," Jacob said.