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Did Facebook's $100 Billion Dream Just Die?

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Once thought to be worth $100 billion or more, new data from private equity exchange SharesPost says Facebook is trading for an implied value of $68.2 billion.

Is this really as bad as it sounds? Yes, and no. Yes, because Facebook's value has long been driven by a feeding frenzy of demand. If demand has dried up in the wake of Google's (Nasdaq: GOOG  ) introduction of Google+ and Apple's (Nasdaq: AAPL  ) integration of Twitter into the iPhone, it means there's little chance that Facebook will reach the $150 billion highs one of my Foolish colleagues predicted earlier this year.

But also no, because SharesPost is an illiquid private exchange in which a small pool of Big Money investors moves shares more than they otherwise might if traded on a public exchange. More than anything, the drop-off means that those with deep pockets like other issues more.

Two issues, in particular, according to the SharesPost report I received earlier today. Social-gaming specialist Zynga now trades at an implied valuation just north of $12 billion, down from $20 billion this summer but up from $10 billion in February. Investors apparently believe the Facebook favorite is capable of competing or even beating console rivals Activision Blizzard (Nasdaq: ATVI  ) and Electronic Arts (Nasdaq: ERTS  ) .

SharesPost also singled out online dating specialist eHarmony, whose implied market value is up 10% to $611 million. Chinese dating site (Nasdaq: DATE  ) commands just $210 million in market cap by comparison.

Interestingly, Facebook isn't the only one falling. Groupon has scaled back its implied valuation heading into an IPO roadshow. Fools may also remember that Google offered $10 billion for Twitter at one time. Now, SharesPost says, the microblogger's privately held shares are trading at an implied value of $6.9 billion -- a 31% haircut. Facebook, by contrast, is down 18% from its January high:

That's still meaningful. Mostly, it says private investors aren't as sure about paying a premium to own shares of the social network. Maybe that's due to competition. Or market mania. Or the early migration of sparrows to the American Midwest. Whatever the cause, Facebook is worth less today, which means investors betting on a $100 billion IPO next year are probably going to be disappointed.

Do you agree? Disagree? Please weigh in using the comments box below. And if you're looking for more IPO ideas, try this free report from my Foolish colleagues and I. In it you'll get all the details on a newly public company that's remaking the quick serve restaurant business in Latin America. You'll also get a closer look at 10 more IPOs with soaring potential -- including a wireless rebel singled out by yours truly. Get your copy of the report; it's 100% free.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Google, Apple, International, and Activision Blizzard. The Motley Fool newsletter services have recommended buying shares of International, Apple, Activision Blizzard, and Google, creating a bull call spread position in Apple, and creating a synthetic long position in Activision Blizzard. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (4) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 27, 2011, at 12:53 AM, DangerousDave8 wrote:

    I get the feeling that Facebook is having a hard time trying to boost revenue. About two months ago I noticed that started posting all these really tacky ads (you are the 1 millionth customer, etc) and ads that had nothing to do with my searches

  • Report this Comment On October 27, 2011, at 7:14 AM, kariku wrote:

    WTF? It takes banks and EU governments months of debates to put 100B into Greece, with a proven tourism industry, but investors are willing to put the same amount into a piece-of-s**t company like FB ?

  • Report this Comment On October 27, 2011, at 11:19 AM, pondee619 wrote:

    How does FaceBook make its money and how much money (revenue) is it making? If it is just through ads, it should be valued as a radio station, No? Content that people want to see/hear at the cost of ignoring the ads. What is so special about FaceBook? Is it all about the number of "eyeballs" ignoring the ads? Every web site has ads. How many of us even notice them much less respond to them with our wallets? Quick, without scrolling back, how many ads are on this page? Who are the advertisers? Did you/are you contacting them?

  • Report this Comment On October 29, 2011, at 7:10 PM, GeorgeAPaz wrote:

    I just read a very good article that had five reasons why you shouldn't buy Facebook.

    #5 was Warren Buffett. A piece of advice he gives is "invest in a company if you would be willing to buy it at the given market cap".

    So what is Facebook worth?

    Numbers wise, I would say probably $20-$25 billion.

    Realistically? $200-??? billion. How can you put a number on a company, a social network, that has almost 1/8 of the entire population of the Earth among its users? Priceless. And an insane price.

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