Is High Valuations of facebook Justified?
- Facebook posted $3.7 billion in revenue in 2011 and $1 billion in profit.
- It will be exploring untapped opportunities in mobile computing, and potentially other Internet services such as email and search.
It can be a risky bet for the investors as stock has been priced at $38 per share and it just managed to remain above the issue price by the help of underwriters. Moreover they need to have a succession plan in place in case anything happens to Mark Zuckerberg who has been credited being a product visionary and no doubt he has done a masterful job in continually improving the Facebook experience.
However we see that Facebook has captured the social media market and has edged Orkut which had a backing of company like Google and thus in days to come we see it getting a hefty valuation provided it starts monetising its client base by serving them advertisements.