Facebook Value Tops $100B Based on Private Market

Facebook Inc. (FB)’s privately traded shares have risen 10 percent since the dominant social network filed for an initial public offering, pushing its market value past $100 billion, according to SharesPost Inc.

SharesPost managed the auction of 150,000 shares of Facebook’s Class B common stock at a clearing price of $44, compared with $40 Feb. 2, according to a statement from the private-stock marketplace yesterday. That values Facebook at $102.6 billion based on an estimated 2.33 billion shares, including stock tied to options that may be issued later.

That valuation would place Facebook higher than PepsiCo Inc. (PEP), the snackmaker that traces its roots back more than a century, and Citigroup Inc., the third-biggest U.S. bank by assets. Facebook filed last week for a $5 billion IPO, and people familiar with the matter have said Chief Executive Officer Mark Zuckerberg is considering a sale that would value the company at $75 billion to $100 billion.

“The upside for long-term investors is pretty shaky at these prices,” said Erik Gordon, a professor at the Ross School of Business at the University of Michigan. “It’s got to be a Google and a half for the stock to move higher” in the long term.

At $100 billion, Facebook would be valued at 26.9 times trailing 12-month sales, or more than double Google Inc.’s valuation when the search-engine operator went public in 2004. Google’s value has increased almost eightfold since the offering, approaching $200 billion.

Revenue at Menlo Park, California-based Facebook jumped 88 percent last year to $3.71 billion, while net income climbed by almost two-thirds to $1 billion.

Share Structure

The valuation based on private-market transactions may change depending on the actual share count after the IPO. As of Dec. 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, the prospectus shows.

Jeremiah Hall, a spokesman for San Bruno, California-based SharesPost, confirmed the auction. Jonathan Thaw, a spokesman for Facebook, declined to comment.

To contact the reporter on this story: Lee Spears in New York at lspears3@bloomberg.net

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net

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