Facebook Going Public at Peak Valuation, Says NIA
FORT LEE, N.J., Feb. 3, 2012 /PRNewswire/ -- The National Inflation Association announced today that it believes Facebook will likely start trading this May at a peak valuation of $100 billion and see its market capitalization and share price decrease in value in the years afterwards. Facebook has successfully grown their monthly active users from 1 million in 2004, to 6 million in 2005, to 12 million in 2006, to 58 million in 2007, to 145 million in 2008, to 360 million in 2009, to 606 million in 2010, and to 845 million in 2011. After achieving compound annual user growth from 2004 to 2010 of 191%, Facebook's user growth in 2011 declined to only 39%. If Facebook begins trading with a market cap of $100 billion, Facebook will be trading for approximately 27 times 2011 revenue of $3.711 billion and approximately 150 times 2011 net income of $668 million.
A price/sales ratio of 27 and P/E ratio of 150 is too high of a premium to pay for a company that has just reached 50% market penetration in the U.S. Moving forward, NIA believes in 2012 we will likely see Facebook's user growth decline to 20%, with its user growth declining to just 15% in year 2013 and 10% in year 2014. It is unlikely that Facebook will ever be able to achieve the same market penetration in Europe that they have achieved in the U.S. Facebook needs to expand into the Chinese market, but the Chinese government has blocked off access to the social network.
In October of 2007, Microsoft invested $240 million into Facebook at a valuation of $15 billion. In January of 2011, Goldman Sachs' international clients invested $1.5 billion into Facebook at a valuation of $50 billion. While Microsoft is set to make a profit of 667% in 4 1/2 years and Goldman Sachs' international clients are set to make a profit of 100% in just 1 1/2 years, NIA believes that the U.S. financial mainstream media that is currently hyping the Facebook IPO, is setting the general public up to get slaughtered on Facebook's common stock.
The consumer social networking space has experienced very dramatic growth over the past few years, with Facebook being the dominant leader of the industry. Moving forward, NIA believes that social networking technology will soon begin to revolutionize the workplace in the same way that it changed the personal lives of millions of people around the world. Recent college graduates, who experienced Facebook's very dramatic growth first hand, are beginning to enter the workforce and are demanding that their employers adopt enterprise social networking technology at their place of employment.
The enterprise social networking industry is projected to grow 61% annually between now and 2016. Enterprise social networking is expected to grow from being a $600 million space in 2011 to a $6.4 billion space in 2016. This is similar to the type of growth seen in the consumer social networking space over the past four years.
Although Facebook is the dominant leader in the consumer social space today, there is a good chance that another consumer social company will grow to become larger than Facebook in the future. Back in 2006, many analysts expected MySpace to remain king of consumer social networking forever and projected MySpace to continue rapidly growing indefinitely. Instead, Facebook surpassed MySpace and MySpace was recently sold by News Corp for 94% less than what they paid for it.
The American public needs to realize that Facebook at a valuation of $100 billion has far more downside risk than upside potential. While Facebook's growth is going to rapidly decline in the years ahead, there are two publicly traded companies in the enterprise social networking space that are positioned for enormous revenue growth moving forward. The user growth of these two companies could accelerate greatly in the years ahead as major corporations begin rapidly deploying their own enterprise social networks.
Today, the enterprise social networking industry is still in its infancy, but by 2016 it is likely that the majority of the largest corporations around the world will be using some type of enterprise social networking platform within their business. The two major publicly traded companies in this space today are Jive Software and BroadVision Inc. Jive is the industry leader with a market cap of $937.97 million. After subtracting Jive's estimated net cash position of $200.99 million, Jive's Engage social platform is currently being valued by the market at $736.98 million.
BroadVision only has a market cap of approximately $153.51 million. After subtracting BroadVision's cash position of $54.4 million and another $17 million in value for their old legacy products still generating revenue, BroadVision's Clearvale enterprise social platform is currently being valued at only $82.11 million.
BroadVision is NIA's latest position. BroadVision just reported that they signed 117 new Clearvale Enterprise customers in 2011, up an amazing 290% from the 30 they signed in 2010. In fact, BroadVision signed 33 new Clearvale Enterprise customers in the 4Q of 2011 alone, which was more than they signed in the whole entire previous year. Jive hasn't yet reported their year-end 2011 results, but Jive has reported that they only signed 113 new Engage customers in the 12 month period ending June 30, 2011.
BroadVision's Clearvale is now growing faster than Jive's Engage, when at their current share prices Jive is receiving a valuation for Engage that is approximately 9 times higher than the valuation that BroadVision is receiving for Clearvale. Besides BroadVision's fully featured Clearvale Enterprise, BroadVision also offers a free starter version called Clearvale Express. Any employee at a company can quickly and easily setup their own Clearvale Express account to use at work. After outgrowing Clearvale Express, companies have the ability to seamlessly upgrade from Clearvale Express to Clearvale Enterprise.
BroadVision also offers a unique Clearvale Passport reseller program, which allows other companies to offer Clearvale to their clients. Softbank, a $30 billion Japanese telecommunications giant, had so much success using Clearvale Enterprise within their corporation that they have now joined Clearvale Passport and are offering both Clearvale Express and Clearvale Enterprise to their partners and clients. NIA believes that BroadVision's free starter Clearvale Express platform along with their reseller program Clearvale Passport, gives the company a huge advantage over Jive. In NIA's opinion, BroadVision has the potential to become a bigger company than Jive in the future.
To learn more about all public social network stocks as well as private social network companies that could go public in 2012, NIA is currently offering its 2012 Social Network Stocks report by going to: http://inflation.us/social2012.html
The National Inflation Association is an organization that is dedicated to preparing Americans for hyperinflation. NIA offers free membership at http://www.inflation.us and provides its members with articles about the U.S. economy and inflation, daily news stories and blog updates, and important charts not shown by the mainstream media. NIA is the producer of economic documentaries that have received a combined 17 million views including the critically acclaimed 'Meltup,' 'The Dollar Bubble,' 'End of Liberty,' 'Hyperinflation Nation,' and brand new 'College Conspiracy.' NIA provides unbiased reviews of the major online sellers of gold and silver bullion and also offers profiles of gold, silver, agriculture, oil, and alternative energy companies that could prosper in an inflationary environment. NIA is the creator of 'NIAnswers,' the world's most comprehensive database of questions and answers about inflation, currencies, debt, and precious metals.
NIA currently owns 147,000 shares of BroadVision. NIA agreed to a 60 day holding period on its initial position of 122,000 shares starting from the date that NIA first suggested the company, but NIA intends to sell these 122,000 shares at some point in the future after the date of February 12th, 2012. NIA intends to sell its additional 25,000 shares of BroadVision and can sell them at any time. NIA reserves the right to accumulate additional BroadVision shares at any time. NIA's co-founders have also been referred business in the past from somebody who has filed as a large BroadVision shareholder. NIA's report is intended for informational purposes only and does not provide investment advice. Neither NIA nor its co-founders are investment advisors or broker/dealers. Past performance is not an indicator of future returns. NIA's stock suggestions are not a solicitation or recommendation to buy or sell any security. Never make investment decisions based on anything NIA says. Do not rely on information from NIA to make investment decisions. Only use the information contained in NIA's report as a starting point for you to conduct your own research and make your own investment decisions. NIA does not guarantee the accuracy of information in its report. Stock market investing is extremely risky. NIA's co-founders may have previously discussed some companies in other media outlets.
SOURCE National Inflation Association