For the simple minds, it’s amazing to see the reported news that Facebook had its IPO at 16 billion this week. I have to agree that I also have hard times believing that people can value a company that is, I do agree, very popular to such high valuation. Learn about Facebook user value.
I wonder how is the Facebook user value calculated?
I understand that Facebook sells ads and that’s how it mainly generates revenues. But at the same time, when you read that General Electrics, a big industry player in the US, just withdrawn a $10 million Facebook ad budget because they were not convinced about the efficiency of the media, I can’t help but wonder.
So could it be that Facebook has some other hidden values that we, as lambda users, can’t figure out? I’m no financial guru, but I can do simple maths. And that simple maths tells me that every Facebook account has generated $16. Simple math I said, since, if we consider that Facebook has probably reached 1 billion users and that the IPO has been valued at $16 billion, then we get $16/user. Frankly speaking, I don’t know how to put this figure into perspective.
Google user vs Facebook user comparison
Let’s try to find some comparison, just for the sake of it. On another article, I told you that Google values your private data at $25. With that in mind, can we say that Facebook values similar data at $16? This is oversimplifying, and I know this is such a crazy comparison, but this is the only example that came to my mind so far. Digging further, we can also think about the $1 billion acquisition of Instagr.am by Facebook that was done recently. But at least, on Instagr.am, there’s not that much sensitive private information that we are actually sharing (at least before it got integrated into Facebook and other online identities).
Has the Facebook user-base been sold at $16 billion?
This brings me back to my initial question: has the Facebook user-base been sold at $16 billion? We also have to take into consideration other assets (infrastructures, human resources, patents, …), but still: user-base and user activities are what makes Facebook so powerful- a Facebook without users is just a meaningless empty blue box.
I can imagine that Facebook apps can eventually sell: but from my understanding, Apps get paid via ads. I also know that Facebook has recently been pushing for paid ads that will encrust into the user’s timeline. But as a user of Facebook, have you ever clicked those paid ads? Probably yes, probably no.
One thing’s for sure: Facebook has a lot of private info
Despite all of this, one thing’s for sure: Facebook has gathered a lot of private information on a billion people all around the world, which is 1/7th of the total population in the world. Ads probably aren’t the only way to market this database. I’m sure some smart people out there have found new ways to monetize that huge database instead of relying on an old-and-tested ad-based revenue stream (which still pays, I do agree). But if we reconsider Google’s offer who’s ready to pay $25 for accessing one user’s internet history, I just can’t help but think that there’s a price for everything, and $25 is quite a big investment if you multiply it by millions of users.
Now what? As Facebook users, we’ve been sold for $16? What’s your view on the Facebook user value? After all, Facebook users are at the heart of this business (as it is common with every social media venture out there). Does it surprise you? Do you think it’s fair enough? Feel free to comment.