Facebook share sale prompts valuation of $56 billion

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Why is Facebook so successful? For one, successful industries are being built on top of the social-networking site — group-buying and social gaming — and Facebook is collecting "taxes" on those industries.NICHOLAS KAMM / AFP - Getty Images
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Private shares market Sharespost just sold 165,000 Facebook shares for $25 each. That price implies a $56 billion valuation of Facebook.

In an email to members, Sharespost said that because the auction was "significantly oversubscribed," it will conduct more sales soon.

Thursday, Wedbush analyst Lou Kerner said he thinks Facebook could easily be worth $200 billion by 2015.

He said Facebook revenues will reach $32 billion thanks to $5 billion in social games credits, $5 billion in off-Facebook ads, and $22 billion in on-Facebook ads. He said Facebook will control 20% of the entire Internet ad market.

Why is Facebook hype so strong right now?

Some ideas:

  • Tremendous user-adoption. The site now has well over 500 million uniques.
  • Revenue traction. Last spring, we heard Facebook revenues could cross $2 billion this year. Who knows where the projections are now.
  • Some very successful industries are being built on top of Facebook — group-buying and social gaming — and Facebook is collecting "taxes" on those industries. In social gaming, Facebook collects 30 percent plus marketing expenses.
  • Facebook keeps hosting press conferences for product rollouts and press keep attending them.

Some reason hype shouldn't be so strong?

  • We have no real idea if Facebook revenues are actually near $2 billion. The company is private and doesn't have to report numbers to anyone.
  • Groupon and its clones buy lots of Facebook ads, and we don't know if group-buying is a sustainable advertising model. Some local merchants say it kills their margins.
  • Zynga and the other social game companies are desperate to find a way to live off Facebook. Google is supposedly building an alternative.

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