Three years is enough time that it is really hard to tell. No one can predict the political, economic and cultural changes that will happen in three years. But if things will remain on course for Facebook, by 2015, the richest man in the world may be no other Mark Zuckerberg. Why you ask? This is mainly because he still owns a large chunk of the company he founded and he is not planning to sell off much of it now. And as we all know Facebook is right now nothing but incredible.
Facebook filed its IPO prospectus with the Securities and Exchange Commission, seeking to raise $5B (see original filling from SEC). The filling provides us, the common people, a chance to see, maybe for the first time, official information about the magnitude of Facebook and their business:
- Facebook currently has 845 million active users as of end of 2011, an increase of 39% as compared to 608 million active users as of end of 2010. For some context, it is assumed that there are 2 billion people world wide with internet access, which means that roughly 40% of world wide internet users are active Facebook users.
- 483 million daily active users on average in December 201, which according to other sources translates into almost 20% of total web traffic in the USA.
- 425 million of these active users are also using Facebook on their mobile devices. In fact the Facebook mobile is the most popular in terms of downloads in all major mobile app stores. However, Facebook currently do not show ads or directly generate any meaningful revenue from users accessing Facebook mobile apps. This is an amazing additional future potential revenue for them.
- 2011 revenue was $3.71 billion, or 88% increase year over year compared to 2010
- While 2011 net profit was a round $1 billion, or 65% increase year over year compared to 2010
And out of all that juicy pie Mark Zuckerberg has 533,801,850 shares, or a stunning 28.2% of the company shares. The market estimates the Facebook value immediately after the IPO in the range of $50B to $100B, with more chances for the upper bound of this range. If that happens, as soon as the IPO happens, Mark personal value jumps to $28.2B. In other words, he jumps directly to the top 10 billionaires (see Fortunes list of top billionaires).
$100B valuation for Facebook is a multiple of 100 on their 2011 net profit and a multiple of 27 on their total revenue. Not really cheap but compared to historic IPOs of successful companies, we have seen such numbers before. Some of these companies continued to be successful and overtime times justified such valuation and continue to grow their market cap several times the original valuation (that was the case for Google at least). If all goes well for Facebook, more and more of the world wide online advertisement budget will go their way (on the expense of Google this time) fueling continued growth in the Facebook stock price to the point where valuation of $200B or $300B or more is something that can happen in three years. When that happens, Mark could become the richest man in the world.