There has been some apprehension over Facebook's recent valuation by Goldman Sachs at $50 billion. In most scenarios a company that hasn't gone public which is valued at such a number would be outlandish, but Facebook (FB) is much different.
Over the past few years FB has become an essential part of 550 million lives, anyone who uses it knows how addictive it can be. It's the epicenter of "social networking." It has replaced myspace and is far more useful and competitive than twitter.
In my opinion, besides Google, FB has the potential to be one of the most successful and highly valuated companies in the world. A company like Google has so many advantages over it's competitors. Right now it is trading at a little over $600 a share, and I would still stamp a buy recommendation on it. It's profits literally have no limits, besides current and future legislation. FB has the same potential. They are the essential social networking site that everyone joins. After 7 seven years they already have 550 million users, over 8% of the worlds population. I don't think its far fetched to say that they reach 1 billion users by 2013. The amount of money they are able to generate now through advertising to 550 million users will essentially double the marketability. There is also nothing stopping an even larger increase in the amount of users.
As of today, Google's market capitalization is over $193 billion and it's still on the rise. I believe FB is on the same track of success, only faster. If and when they have an IPO, look for a high initial price ($200/share) and a record setting capital appreciation in the first two years. Hopefully some of us are lucky enough to get in on the offering!
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