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.