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BW Businessworld

At Face(book) Value

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It appears that Facebook's IPO isn't justifying the hype it had generated; the roadshow to woo institutional investors isn't creating the kind of buzz one would've expected (this could change quickly).

Reports suggest these investors are worried about decelerating numbers: Facebook apparently said it wouldn't be able to meet the most optimistic projections.

The company's value — based on the last time it was privately traded — is a tad over $100 billion. That's about half the value of Google. The company's revenue growth in the first quarter of 2012 was 47 per cent, compared to 55 per cent in the last quarter of 2011; the pace of growth has been declining for four quarters.

Advertising revenue growth was 37 per cent. Google's ad display business, on the other hand, is growing faster than Facebook's. It's another matter that Google's ad revenue is 10 times that of Facebook's; its cash flow is greater than Facebook's total revenue.

Will investors ‘making book' (or placing bets) on Facebook's IPO also make money?

(This story was published in Businessworld Issue Dated 21-05-2012)