February 02, 2011, 2:30 PM — Trefis, an online financial community dedicated to parsing out the value of companies by assessing future performance, has done a fascinating in-depth analysis of Facebook in an effort to determine how much the social networking giant is worth.
The short answer is that Trefis thinks Facebook's market value is $45.1 billion, with 60 percent of that value coming from revenue generated by text and display ads.
The long answer is that it's all a bunch of guesswork. Educated guesswork, to be sure, not to mention educational for readers who want a serious lesson in how to analyze a company's financials.
But there are a number of caveats that Trefis itself points out. For starters, Trefis notes that Facebook is a private company and thus not yet required to disclose its performance data. (That soon will change now that Facebook has more than 500 investors, the tipping point for SEC disclosure.) Thus, Trefis acknowledges, "our analysis of Facebook is based on limited, publicly available information and our own estimates."
Even looking at a very baseline statistic -- monthly unique visitors -- Trefis bases its analysis on "estimates" and forecasts (monthly unique visitors "could continue to increase to more than 2 billion by the end of the Trefis forecast period"). Could continue. Maybe. Maybe not. Who really knows?
I'm not criticizing, I'm just reiterating that Trefis essentially is trying to do what any stocks analyst or sports bookie tries to do -- predict the future. It's a tough game. That being said, Trefis's analysis sounds reasonable, detailed and impressive.
The thing is, you probably could say the same for the many other financial players who have stepped up to the plate and taken a swing at Facebook's valuation. Trefis includes a chart in its analysis of other valuations. Some are a year old, granted, but many are quite current.
They're also all over the map:
Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.