Sina Technology News, February 7th, early morning Beijing time - The American tech blog BusinessInsider compared the financial data of Facebook and Google (Weibo) before their IPOs (Initial Public Offerings) on Monday. The results showed that Facebook's strong development provided justification for its high valuation.
Here are the comparisons of various data:
Net profit is 9.47 times that of Google
By comparing the financial data of Facebook and Google one year before their IPOs, it was found that Facebook's revenue was $3.711 billion, while Google's was $961.874 million. Facebook's revenue was 3.86 times that of Google. Facebook's net profit reached $1 billion, while Google's was $105.648 million. Facebook's net profit was 9.47 times that of Google. Additionally, Facebook raised $5 billion through its IPO [Suqian Google Optimization http://suqian.tuoqing.com], while Google raised $2.7 billion. Facebook's amount was 1.84 times that of Google.
Potential valuation could reach as high as $256.6 billion
According to Google's IPO issue price, Google's IPO market capitalization reached $23 billion; if calculated based on the closing price on the first day, Google's market capitalization was $27.1 billion. Referring to these two sets of data, according to Facebook's revenue being 3.86 times that of Google, Facebook's potential market capitalization would be $88.78 billion and $104.606 billion respectively. According to Facebook's net profit being 9.47 times that of Google, Facebook's potential market capitalization would be $217.81 billion and $256.637 billion respectively.
If only considering revenue and net profit as reference standards for valuing Facebook, then its valuation of $75 billion to $100 billion should not be surprising. However, what needs to be considered is whether Facebook's revenue growth rate can reach the same level as Google's. Although its starting point is high, its revenue growth rate may not reach the levels of the past.
Advertising Revenue
By comparing the data of both companies one year before their IPOs, Facebook's advertising revenue was $3.154 billion, while Google's was $913.78 million. Advertising revenue accounted for 85% of Facebook's total revenue and 95% of Google's. Facebook's revenue was more diversified.
Additionally, Facebook's advertising revenue grew by 152% year-over-year, with 74% of its revenue coming from the U.S. market. Google's figure was 69%, with 56% of its revenue coming from the U.S. market. 12% of Facebook's revenue came from Zynga, while 21% of Google's revenue came from external partners.
Revenue Costs
By comparing the data of both companies one year before their IPOs, Facebook's revenue costs were $860 million, while Google's were $121.794 million [Suqian Website Optimization http://suqian.tuoqing.com]. Facebook's costs were 7.06 times those of Google.
Facebook's sales and marketing costs were $427 million, while Google's were $120.328 million. Facebook's costs were 3.55 times those of Google.
Facebook's R&D expenditure was $388 million, while Google's was $91.228 million. Facebook's expenditure was 4.25 times that of Google [Google Keyword Optimization http://google.tuoqing.com].
Facebook's total cost expenditure was $1.955 billion, while Google's was $619.41 million. Facebook's costs were 3.16 times those of Google.
In addition, revenue costs might be an important factor in evaluating Facebook's revenue. If revenue costs continue to rise, Facebook's profit margin will be eroded.
Revenue per Employee
At the time of their IPOs, Facebook and Google had employee counts of 1,907 and 3,200 respectively. In the year before their IPOs, the revenue generated per employee at Facebook and Google was $1.159688 million and $504,391 respectively. Facebook's revenue per employee was more than twice that of Google. The profit per employee averaged $312,500 for Facebook and $55,400 for Google.
As of a year ago, Google's average profit per employee was $336,297.
Summary
Google's IPO became a hot topic in the tech world over the past five years, and the same goes for Facebook, which has grown from a startup created at Harvard University into a major company with over 800 million users, about to go public. From an indicator perspective, its business will be very strong. Considering the current tech environment, Facebook's current valuation does not seem surprising.
Of course, this does not mean that Facebook will definitely ensure success in the future. Revenue costs and maintaining past revenue growth rates remain issues that Facebook needs to address.
However, referring to Facebook's core data, Facebook's IPO is not necessarily indicative of a new tech bubble. (Xiaoming)
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