Facebook Value Slips to $98 Billion in Private Market Sale

Facebook Inc.’s implied value fell by almost 5 percent to about $98 billion in an auction of a fund that holds shares of the world’s biggest social-networking company.

SharesPost Inc. managed a Feb. 14 auction of 200,000 fund units, each equivalent to one Facebook share, at a price of $42 apiece, according to a statement from the private-stock marketplace yesterday. SharesPost estimates Facebook has 2.33 billion shares outstanding, including stock tied to options that may be issued, according to its website.

The price dropped from last week, when SharesPost handled an auction of 150,000 shares of Facebook’s Class B common stock for $44 each, or an implied value of $102.6 billion. Facebook filed for an initial public offering on Feb. 1, and people familiar with the matter have said the company is considering a sale that would value it at $75 billion to $100 billion.

“The real test of a company’s worth only occurs in the public market,” said Lawrence Creatura, a Rochester, New York-based money manager who helps oversee $370 billion at Federated Investors Inc. “It’s like trying to forecast an athlete’s performance in a game by looking at historic statistics. Those can help you make an educated guess on things, but anything can happen on game day.”

Facebook’s Stock

Facebook jumped about 73 percent in value on the secondary market last year to $71.2 billion, according to a report last week by Nyppex LLC, a Rye, New York-based broker-dealer and research firm. The biggest gainer was microblogging service Twitter Inc., which more than doubled to $8.52 billion. Yelp Inc., the consumer-review website that filed for an IPO in November, rose 44 percent to $705 million.

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 IPO prospectus shows.

Facebook, run by Chief Executive Officer Mark Zuckerberg, is seeking to raise $5 billion, according to its IPO filing. At a valuation of $100 billion, the company would trade at 26.9 times 2011 sales, more than five times higher than search-engine operator Google Inc.

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.

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