NZ Herald
  • Home
  • Latest news
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather forecasts

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Budget 2025
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
    • Cooking the Books
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • What the Actual
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business

Biggest ever internet float values facebook as high as $120b

Bloomberg
2 Feb, 2012 04:30 PM5 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

Mission statement: Mark Zuckerberg says moving fast and being bold have helped Facebook succeed.
Photo / AP
Mission statement: Mark Zuckerberg says moving fast and being bold have helped Facebook succeed. Photo / AP

Mission statement: Mark Zuckerberg says moving fast and being bold have helped Facebook succeed. Photo / AP

Facebook may command a valuation more than five times higher than Google as it seeks to raise US$5 billion ($6 billion) in the world's largest initial public offering of an internet company.

The social-networking company, which filed for the IPO yesterday, may be valued at as much as US$100 billion ($120 billion) in the sale, two people with knowledge of the matter said.

At that level the company would trade at 26.9 times 2011 sales, compared with about five times for search-engine operator Google, whose market value has jumped eight-fold since its IPO.

Facebook said it planned to trade on either the Nasdaq or the NYSE.

"Google was an awesome IPO," and its success since is the reason Facebook can come out at such a high valuation, said Tim Cunningham at Thornburg Investment Management in Santa Fe, New Mexico.

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.

"That hope and potential is exactly why it's potentially a US$100 billion deal."

Facebook co-founder Mark Zuckerberg is asking investors to pay more than double the valuation of Google's 2004 IPO even as competition from Google+ and Twitter increases.

Facebook wrested the lead in US online display ads from Yahoo last year, taking a 16.3 per cent share, according to researcher EMarketer.

Advertisement
Advertise with NZME.

Facebook didn't disclose the number of shares it plans to sell in its filing, and the amount it is seeking to raise may change.

The company is considering a valuation of US$75 billion to US$100 billion, said the people, who declined to be identified because the matter is private.

Based on the top end of that range, Facebook would be valued at 100 times its 2011 net income. Fast-growing companies' price-to-earnings ratios often start high and gradually fall.

Google, which at its IPO was valued at 121 times trailing 12-month earnings, now trades at about 20 times.

Discover more

Business

Too much power rests in one man's hands, says expert

02 Feb 04:30 PM
Business

Facebook shares its big secrets

02 Feb 04:30 PM
Companies

$1 billion Facebook fortune for Bono

03 Feb 04:30 PM
Business

FMA warns of illegal NZ Facebook offer

29 Feb 04:35 PM

Sales at Facebook, which became the dominant social-networking site in 2008 by leapfrogging pioneer MySpace, surged 88 per cent to US$3.71 billion in 2011.

Net income in that period jumped 65 per cent to US$1 billion. Facebook's revenue may rise to US$6.5 billion to US$6.9 billion this year, EMarketer estimates show.

The site, which has amassed more than 800 million users, makes money by selling ads to companies that want to reach that growing base. Industry wide, spending in the US online display ad market may surge 20 per cent this year, according to EMarketer.

To capture those ad dollars, Facebook will have to find ways to continue to engage users. US visitors to Facebook in December spent an average of seven hours on the service, a 32 per cent increase from a year earlier, ComScore said. Visitors spent about 4.5 hours on Google's sites and even less on Yahoo's.

"The greatest challenge obviously is keeping the advertising momentum because advertising is their key source of revenue," Debra Aho Williamson, an analyst at EMarketer, said of Facebook. While almost 90 per cent of last year's sales probably came from ad revenue, Facebook also is seeking new sources, such as credits that values Facebook as high as $120musers buy and redeem for goods and services, she said.

Zuckerberg co-founded Facebook in 2004 with his college roommates, creating a site that allowed students to interact via the web. He later made the service accessible to everyone, intensifying competition with sites such as MySpace and Friendster, founded in the two years before.

Advertisement
Advertise with NZME.

Facebook raised US$1.5 billion from backers including Goldman Sachs Group and Digital Sky Technologies, according to a January 2011 statement, an investment that implied a total value of US$50 billion for Facebook. The company's valuation is currently pegged at about US$74 billion by SharesPost, which handles trading of closely held companies.

Google, one of Facebook's main competitors in web advertising, raised US$1.9 billion in its IPO, including an over-allotment option.

For Facebook, consistent creativity should help spur sales growth, said Forrester's Elliott. "Facebook gives people a reason to come back, more than any other social space that has gone before, more than any other social space that we see online today. They're constantly introducing new features."

The numbers

US$5 billion
sought by Facebook in its initial public offering.

US$100 billion
top end of the valuation for Facebook.

Advertisement
Advertise with NZME.

US$1 billion
Facebook's net income for 2011.

- Bloomberg

Face values

Facebook CEO Mark Zuckerberg has outlined five core values in a letter to investors. They are:

Focus on impact
The best way to have the biggest impact is to always focus on solving the most important problems. Most firms do this badly and waste time.

Move fast
Moving fast lets us build more things and learn faster. We have a saying: "Move fast and break things." If you never break anything, you're probably not moving fast enough.

Advertisement
Advertise with NZME.

Be bold
Building great things means taking risks. In a rapidly changing world you're guaranteed to fail if you don't take any risks.

Be open
A more open world is a better world because people with more information make better decisions and have greater impact. We make sure everyone at Facebook has as much information as possible about every part of the company.

Build social value
Facebook exists to make the world more open and connected, not just to build a company. We expect everyone to focus every day on how to build real value for the world in everything they do.

- AP

Save

    Share this article

Latest from Business

Premium
Media Insider

Breakfast battle: Hosking v Barnett ratings and Bridge is back; RNZ cuts: What's in line?

23 May 08:10 AM
Premium
Shares

Market close: NZ sharemarket falls as interest rates take centre stage

23 May 06:11 AM
New Zealand

Agritech leaders say Budget offers tax relief but lacks bold vision

23 May 04:01 AM

Deposit scheme reduces risk, boosts trust – General Finance

sponsored
Advertisement
Advertise with NZME.
Recommended for you
Hurricanes v Reds: 'Canes eye top four
Super Rugby

Hurricanes v Reds: 'Canes eye top four

23 May 09:25 AM
How two rugby stars are reshaping the women's game
Rugby

How two rugby stars are reshaping the women's game

23 May 08:37 AM
'Can't stop our motion': Run It Straight CEO on cancelled events
New Zealand

'Can't stop our motion': Run It Straight CEO on cancelled events

23 May 08:25 AM
'No other persons sought': Homicide probe continues over 77yo man's death
New Zealand

'No other persons sought': Homicide probe continues over 77yo man's death

23 May 08:00 AM
'Unforgettable': Popular Akl restaurant to close after 'sensational' run
Entertainment

'Unforgettable': Popular Akl restaurant to close after 'sensational' run

23 May 08:00 AM

Latest from Business

Premium
Breakfast battle: Hosking v Barnett ratings and Bridge is back; RNZ cuts: What's in line?

Breakfast battle: Hosking v Barnett ratings and Bridge is back; RNZ cuts: What's in line?

23 May 08:10 AM

Ted Lasso meets Drive to Survive in Auckland FC doco; Rock legend and a Kiwi ad campaign.

Premium
Market close: NZ sharemarket falls as interest rates take centre stage

Market close: NZ sharemarket falls as interest rates take centre stage

23 May 06:11 AM
Agritech leaders say Budget offers tax relief but lacks bold vision

Agritech leaders say Budget offers tax relief but lacks bold vision

23 May 04:01 AM
What's in the Budget for agriculture?

What's in the Budget for agriculture?

23 May 02:00 AM
Gold demand soars amid global turmoil
sponsored

Gold demand soars amid global turmoil

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • What the Actual
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven CarGuide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP
search by queryly Advanced Search