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Facebook to make $1bn in 2011, worth $50bn

Goldman Sachs values social network at $50 billion

Facebook reportedly generated $1.2 billion in revenue in the first nine months of 2010, according to a document being distributed by Goldman Sachs.

What are reportedly Facebook's financials began leaking out Friday thanks to a not-very-secretive 101-page document that Goldman Sachs is sending out to potential Facebook investors, according to Reuters.

Leaky investors
Goldman Sachs, which earlier this week invested $450 million in Facebook and valued the social networking company at $50 billion, is providing its wealthiest customers with the most detailed information about Facebook's financials to hit the street yet.

Citing an unnamed source who received the document, Reuters is reporting that Facebook earned $355 million in net income in the first nine months of 2010. It also noted that the financial statements being handed out have not been audited and do not specify how Facebook is pulling in its revenue.

Businessweek is reporting that if Facebook can maintain its growth and margins, the company could realistically pull in $1 billion in profit in 2011. Facebook declined to comment for this story.

"We're finally seeing some numbers on Facebook's revenue and profitability and the news is mostly good," said Dan Olds, an analyst with The Gabriel Consulting Group.

"The company has solid revenues north of a billion and profit margins of anywhere from 25% to 35%. These are great numbers, but not necessarily high enough to support a $50 billion valuation."

Revenue growth
To financially get where Goldman Sachs thinks Facebook can go, the company won't be able to just stay the course.

"The only way Facebook at $50 billion looks like a good investment is if you believe that the company is going to continue to grow revenue and profits at a huge clip well into the future," added Olds.

News of Facebook's financials surfaced just one day after reports hit that the social networking company is on the cusp of gaining 500 shareholders, an invisible line enforced by the US Securities and Exchange Commission (SEC) that will force Facebook to disclose its financials even though it's not a publicly traded company.

The Wall Street Journal reported yesterday that Mark Zuckerberg, CEO and co-founder of Facebook, is preparing to launch an initial public offering in 2012. That echoes statements made last September by Facebook board member, venture capitalist and PayPal co-founder Peter Thiel that Facebook was eyeing an IPO in late 2012.

News about Facebook's IPO prospects follow widespread speculation in recent days that another social networking company, LinkedIn, is working on an IPO of its own and could beat social networking heavyweights like Facebook and Twitter to the IPO gate.


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