Just as the rumours of a “Facebook shutdown” were subsiding, a boutique research firm analyst Albert Babayev posted an article where he says Facebook could be having a market cap of USD 224 billion in 2014, given of course, that assumptions held true.
Now, this is like taking another extreme view of Facebook–this one being overly optimistic, especially when Facebook’s said valuation of USD 50 billion by Goldman Sach is being seen by quite a many as irrational.
In the article titled “How Much Is Facebook Really Worth?” Albert Babayev says, “Two weeks ago, I analyzed Facebook to see how much the company was worth. More recently, I was shocked to see Goldman Sachs paying 25x-28x revenues for the company, while Google (GOOG) and Apple (AAPL) are getting 4-8x revenue. Absurd, I thought, that anyone would pay such a high price for the Facebook stock. I realized that the investors Goldman is pitching to are savvy and are most likely seeing something that we could be missing, (although I agree, some are irrational!)Then I quantified the company’s growth. Wow. I am now projecting that its current stock value of $25 will grow by more than 4 times (to $111) by 2014! Here is why: I extrapolated growth at current levels and I was actually really shocked to see the results. My model is below and hopefully you will be as surprised as I was.”
He presents the following chart where he has shown the calculations:
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