Facebook Valuation – $190 Billion Explained

Facebook Valuatation

Facebook is now worth more than $190 Billion dollars. If you were following their stock yesterday, and their earnings report the day before, Facebook shares hit their highest value ever at $76.74. Today, shares are trading at $75. This means Facebook’s market capitalization is now around $190 billion, which is crazy. I couldn’t believe it because Facebook’s valuation is higher than companies with real physical assets, compared to their admittedly virtual assets. There is a reason behind the Facebook valuation madness. Here’s why.

Revenues, Sales were up 61%

Facebook reported its Q2 2014 earnings, blowing away analysts’ expectations. Revenue went up 61% to nearly $3 billion ($2.91 billion) and earnings per share were $0.42 (which was 12 cents more than analysts predicted). Income from it all was a feat within itself, $1.4 billion. This time last year it was just $562 million. Facebook has outperformed time and time again since going public.

Monthly Active Users (MAUs)

Here’s the picture regarding the users. Facebook added 41 million users last quarter and 63% of users visit daily. Facebook delivers over 12 billion messages a day. Not to mention 300 million MAUs on Messenger and Instagram is still growing.

Their earning per user is not half bad either. Facebook earns about $4.32 per user in the US and Canada. Worldwide Facebook earned $1.60 per user. There is no wonder why Facebook’s valuation is massive.

The Facebook Mobile Game

Now, most users go to Facebook on their phones and the mobile ads are performing very well. You should all know by now that the world is moving to mobile, and when you look at the time spent on mobile, 1 in 5 minutes on mobile is on Facebook. 1 billion people use Facebook on their phones every month and 650 million use Facebook on mobile every day. On top of all this Facebook’s mobile ad revenue grew 151% and was 62% of their total ad revenue.

Facebook’s valuation cap status is what’s crazy. It took Apple nearly three decades to achieve such a market value and it took Google five years. Facebook has only been public for two years. Overall, it was another steady quarter of user and revenue growth for Facebook. The Facebook valuation is crazy but they got the goods to back it up.

Facebook Pages Ratings complete with New 5 Stars

Has anyone noticed the new stars by the names of Facebook Pages? Facebook is apparently testing the ability of displaying star ratings on Pages on the desktop version of its site. The new Facebook pages ratings are star ratings, out of a possible five. I have the Star ratings on all the Pages I run, but Facebook is only allowing a small subsection of users to view the stars.

Even though this looks new, apparently using a star system for place and page ratings isn’t entirely new. Facebook has been collecting star ratings from users on the desktop and via local search for quite a while now, and also seeking star ratings on content and apps via Timeline. What is new is literally just the displaying of the rating itself, in a prominent place on a business or place Page.

If the Facebook pages ratings move from the testing phase to a complete Facebook adoption I see this causing a couple of weird changes. First, it gives users a degree of opinionated information surrounding places and content that is more than just a simple like or do not like. It will be comparable to the social ranking of the number of Likes something has and how that number indicates how present it is in the public eye. But now if Facebook rolls out the 5-star ranking to everyone, Likes will now communicate how each user feels about their Like.

Facebook pages ratings with 5 stars

I personally hope that for businesses the displaying of this rating will be optional. Who would want to display a rating of 2 out of 5 stars? No one. If Facebook is making a play to compete with the Yelps, Foursquares and TripAdvisors of the world then it would only make sense that the 5-star ranking has to be required by default. Some businesses would be very pissed about that. Mainly because business couldnt just maintain a presense on FB by throwing up memes and random pictures every so often. If the 5-stars roll out, and are mandatory for businesses, that means businesses have to place alot more emphasis on customer service on their pages. Likes are easy, after all, but getting users to fill up the new Facebook pages ratings’ star bar will require a lot more effort and interaction.

Apparently Facebook said “We’re extending star ratings on Facebook from mobile to desktop – to make it easier for people to discover great businesses around them. This is beneficial for both businesses and consumers. Star ratings encourage more people to rate a business, making it eligible to appear in News Feed and help others discover a business they didn’t know about previously. For businesses themselves, this also leads to greater brand awareness.

As you may recall, star ratings launched in early 2012 with the introduction of Nearby on mobile. Now we’re bringing the visibility of star ratings to a more prominent spot at the top of Pages’ timeline on desktop and to the preview in News Feed.”

That is the vaguest answer of all time. Basically she said they are going to do it. But I want answers like, who is actually rating the pages? How do I change the pages rating and can I hide it? Why wont they answer questions like these?

Well from what I’ve found it looks like Facebook users can give bad star ratings, not based on the actual business but rather based on the Facebook content of the posts. So for example, if you are a page who has ads and promoted posts I would lay off the spammy looking ads. If Facebook users don’t like your ad or see it alot, it is more than likely that they will give you a 1 star rating. Then BAM, just like that, your rating will go down.

I guess only time will tell but I don’t think the rating will be here to stay. Too many pages are already complaining about them.