[Updated at 10:33 am, Nov. 1, to add Facebook IPO information.]
Facebook, if it were a publicly traded company, would be valued at over $30 billion, according to sources using online marketplace SecondMarket.
Early investor Peter Thiel has said that Facebook is “the least overvalued of the major Internet companies in the world. If it’s a choice between Google and Facebook you should be long Facebook.”
If anyone’s undershooting the value of Facebook, it’s not Facebook investors and employees doing the deed. In fact, it looks like two of the most high-profile Facebook figures are having a grand old time comparing the social network to Silicon Valley's number one search engine, Google, which was valued at $27 billion immediately after it went public in 2004. (Google today is valued at around $150 million.)
The other key Facebook figure is Paul Buchheit, the creator of Gmail and founder of FriendFeed (which sold to Facebook in summer 2009), who reiterated Thiel’s sentiment this past September:
I believe many people were (and still are) significantly undervaluing Facebook equity. It has the potential to be worth more than Google. It's already trading over $25B (vs the silly-low $6.5B that people were discussing at the time of the FriendFeed deal) [...] I think re-doing the math on this deal in a couple of years should be very interesting.
I’m just curious why both Thiel and Buchheit think the company is so undervalued, when investors and the media pounce on any detail even vaguely related to the potential, looming Facebook IPO.
For example, Mail.ru, formerly Digital Sky Technologies (DST), announced a couple weeks ago that it was planning its own initial public offering. The blogosphere erupted with the news because DST was well-known to have invested in several succesful U.S.-based tech companies, including Groupon, Zynga and, yes, Facebook. In fact, the Russian firm had invested $200 million in the social site at a $10 billion valuation, leaving DST with an approximately 12% stake in Facebook.
With Mail.ru going pubilc, everyone perked up at the chance of grabbing some Facebook shares, even if it meant taking the long way around. As it turns out, Mail.ru only holds a 2.38% stake in Facebook. The other 10% or so belongs to DST Global, a DST entity remaining private. And that's the sound of everyone's hopes deflating.
The point is that no matter what Buchheit or Thiel think, Facebook is tremendously valued by people in the tech industry. While, of course, there will be naysayers when the day of the IPO actually arrives, there will probably be a magnitude higher number of people itching for some shares.