Facebook's Valuation Is Suddenly Backsliding Ahead Of The IPO Filing

Ignition Conference 2011 Sheryl Sandberg FacebokEverybody calm down. $75 billion is still a big number.

Photo: Michael Seto

For months now, “sources” have been telling reporters (at CNBC, WSJ, and elsewhere) that Facebook IPO valuation will be somewhere near $100 billion.But as the IPO slowly becomes a reality – Facebook is expected to file this week – that number is gently slip-sliding lower.

Kara Swisher reports: “Sources tell me that the number will be lower that $100 billion figure being thrown around.”

The WSJ, meanwhile, now says the valuation will be in the range of $75 billion to $100 billion. (That’s a GINORMOUS range. You could fit two Twitters and AOL in there!)

Why is Facebook’s expect valuation backsliding?

Two reasons:

The old IPO expectations game. To get a nice solid pop on the day of an IPO, a newly public company has to come out at a valuation lower than where traders would have guessed.

Disappointing revenue numbers. Facebook’s 2011 operating profit was about $1.5 billion and that its operating revenues were about $3.8 billion. In early 2011, sources told us EBITDA would approach $2 billion, and revenues $4 billion. The real numbers aren’t way off, but they are also not overwhelming. Also – in an unfair comparison that Facebook execs will nonetheless have to get used to a deal with anyway – Facebook is way behind where Google was at the same age.

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