Yes, Facebook has 600m users – but could it really be worth $100bn?

Is there serious money to be made from popular social media websites such as Facebook, Twitter, LinkedIn and Groupon?

Many certainly think so, judging by the price tags that have been attached to these businesses.
LinkedIn, the business-based social network was floated on the US stock market in April this year. Its share price doubled in the first day, as the volume of shares traded meant investors effectively bought and sold the company three times.
But eyes are now on even bigger prizes. Groupon, the online voucher company, has said it is aiming for a $750m flotation on the US stock market this year.
Zynga – the game-maker that persuaded millions to become virtual farmers – is seeking an IPO in the US, and has been valued at $9bn, while it has been suggested that Twitter could be worth $10bn. You don’t need 140 characters to say that’s a lot of money for a company that’s yet to make a profit.
But these are small beer compared to the frenzied valuations circling Facebook, which is widely expected to seek a stock market listing next year. Some are suggesting its could be valued at $100bn – more than Ford and Visa are worth. At this price it is still worth less than that other internet behemoth, Google, which, coincidentally enough, has recently launched its own social media site, Google+.
Rob Morgan at Hargreaves Lansdown said: “The rise in social media has been meteoric, largely due to the internet’s greatest strength – rapid and inexpensive sharing of information. Sites like Facebook, have a reached a critical user mass. If it were a country, its 600 million users would make it the third largest in the world in terms of population.”
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