Is Facebook Really Worth $Infinity?

What’s the Latest Development?

Facebook could become a publicly traded company as soon as Wednesday, possibly raising $10 billion in cash and a valuation of $100 billion. That would give the company the same value as McDonald’s and about half the value of Boeing. Unlike other Web-based companies, Facebook has not pushed to make headlines about its IPO. In fact, its hand has been forced by its increasing number of shareholders. Once more than 500 people own shares, it must publish its earnings. By making an IPO, it can benefit financially for doing so.

What’s the Big Idea?

Is an Internet company whose entire income relies on advertising really worth $100 billion? Or will this ostensibly good news ($10 billion in cash!) cause Facebook to go the way of AOL and Yahoo!, who also dominated the Internet but did not prove innovative or necessary enough to remain at the top. Creator of Facebook, Mark Zuckerberg, has not been eager to meet the short-term expectations of Wall Street investors. Much like Google, he must try to mediate public demands for big profits while creating a long-term future for his company.

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