STERNE AGEE: Here's Why Facebook Is Worth $126 Billion

mark zuckerberg

Photo: Facebook Roadshow

Facebook is worth about $126 billion ahead of its IPO, according to a new research note by Sterne Agee’s Arvind Bhatia.Analyst firm Sterne Agee just set a price target of $46 for Facebook with a “buy” rating — it’s one of a handful of firms that have already issued a rating on it.

After going public, Facebook will have around 2.75 billion outstanding shares (including options), according to its most recent filing with the Securities and Exchange commission.

Included in the note are a ton of detailed charts about Facebook’s financial performance. It’s very detailed — and worth checking out if you look to buy into Facebook’s IPO.

Most of the entire world population on the Internet uses Facebook.

In the future, Facebook's penetration will be even higher, according to Sterne Agee estimates.

Sterne Agee predicts around 1.5 billion Facebook users by 2016.

By 2015, Facebook will account for about 16 per cent of the advertising market.

So far, Facebook has around 900 million users.

Most of them come from Asia, Europe and the United States and Canada. But it's growing rapidly in other countries like those in South America.

It's also growing very quickly in Asia, whereas the growth is slowing in Europe, the U.S. and Canada.

Facebook has more than 500 million users that visit the site every day.

Most of them come from Europe, but growth in the rest of the world outside of the three largest regions is continuing on a steady pace.

Daily user growth is highest in Asia and other countries outside Europe, the U.S. and Canada.

Surprisingly, engagement for Facebook still appears to be ticking up.

Engagement has dropped off slightly in the U.S. and Canada, but it's growing in other regions.

By 2015, Facebook could generate around $1 billion off mobile advertising.

Internationally, Facebook has around 500 million monthly users. It's a nice growth curve.

Increasingly, more of those users are mobile users.

Facebook has huge potential in China — an extra 200 million plus users and around $600 million in revenue.

Revenue from Payments has leveled off slightly after taking off like a rocket. That's the revenue Facebook makes every time you buy something on Facebook with Facebook credits.

But Payments is becoming an increasingly important segment of Facebook's revenue. Facebook has said it's committed to it.

Most of Facebook's revenue comes from the U.S. and Canada. Europe is the second-largest contributor.

Here's another view of Facebook's revenue mix.

Facebook's business is still affected seasonally — with growth dropping off between the fourth and first quarters on a quarter-over-quarter basis.

Google's revenue grew way faster than Facebook in its early years.

Here's Facebook's projected EBITDA after IPO, compared to Google's.

Here's the full consolidated look at Facebook's future revenue potential. Sterne Agee predicts more than $1 billion in annual revenue off payments.

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