What is Facebook really worth?

Facebook has been valued at $50 billion following a recent $500 million cash injection from Goldman Sachs and Russian investor Digital Sky Technologies.

A value of $50 billion means that the social network is worth more than eBay, Yahoo! and Time Warner.  This also means Facebook is worth as much as Tesco.

However, according to the Guardian, Tesco is expected to announce pre-tax profits of £3.7 billion this year ($5.7 billion), while Facebook’s top-line revenues (yes, top-line) was around $2 billion last year.

Can the two companies possibly be worth the same amount? While Facebook remains a private company, it is not obliged to report its earnings to the market.  As such, its real worth is a guessing game.

Looking at Facebook’s revenue streams, advertising revenue is expected to surpass £1 billion this year (though some brands have been slow to recognise the value of social media, and privacy still remains a fairly contentious issue), but games such as Farmville earn the social networking site hundreds of millions of dollars each year.  There is also the future growth of the network – its user base is soaring, particularly in Asia (Indonesia has seen an incredible 3481.7% increase in take-up in the last 24 months).

Advertisers are likely to pick up on this. eMarketer predicts that ad spending on social networks in the UK will double by 2012 – rising from £130 million this year to £275 million by 2012 (an increase of more than 110%).  This would boost social network ad spend from 3% of all online ad spending to 6%.

Unsurprisingly, Facebook is expected to take the greatest share of spending as the most popular site in the UK (and the US).  “There’s a new breed of advertisers that have recognised this shift and understand that he who adds the most value to the consumer wins,” a representative from Facebook told eMarketer.