May 19, 2012 | In: Technology
How Much Is a User Worth to Facebook?
Unless you have slept through the day yesterday, I’m sure that you were annoyed, as much as anyone else, with the news all day on Facebook becoming public. The IPO, to say the least, was disappointing to Facebook executives, as the stock closed just 0.61% higher than the opening price.
Apparently, the FB people prepared for the worse, as there were many buy orders in the case the stock was about to drop below the $38 level. I’m sure that the stock was going to close on the negative the first day of its listing, but there was an invisible hand lifting the stock everytime it tried to near the $38 level (there was a point where the stock reached $38.01 around 11:54 AM, take a look at this:
In any case, the stock closed $38.23, making the market cap of Facebook to be worth $81.74 billion. Now, let us answer 3 questions:
- How much is a Facebook user worth to Facebook?
- How much is a Facebook user worth according to the market?
- How much is a Facebook user really worth now that Facebook has a market cap of $81.74 billion?
Now since we know that Facebook has 900 million accounts, we can make an easy calculation to get all the above.
Value of a Facebook user according to Facebook: Since Facebook priced its IPO at $38/share, and has 2.14 billion shares, this means that Facebook, as a company is worth (according to Facebook) $81.32 billion. This means that the value of each user according to Facebook is $90.35.
Value of a Facebook user according the market: The market determined (wink wink) that Facebook is worth $38.28 a share, making the company worth $81.74 billion, which in turn makes each user worth $90.82. Nearly 50 cents over Facebook’s valuation (that number will change considerably).
Real value of a Facebook user based on the FB’s market cap: The calculations above assumed that the 900 million accounts that Facebook has are actual users. If you are a programmer you know that an account is not necessarily equivalent to an active user. An account might be a test account by a user, a dormant account, a never used account, etc…
Assuming that Facebook is telling the truth that it has 900 million accounts, and assuming that 50% of these accounts are test/spam accounts, this means that Facebook’s real users are 450 million. Assuming 50% of these users are kids, then this means that Facebook has 225 million adult users. Assuming 20% of these users have deactivated their accounts permanently, this means that Facebook has 180 million active adult users, which means that the value of each Facebook adult active user is $454. I am not going to judge whether that number is low or high, I leave the judgement to you. Just keep in mind that if you find yourself a bit strapped on money, then you are worth about 12 Facebook shares!
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