Facebook Reaches New High Of $87.5 Billion
Facebook stock closed at $35 in an auction on SharesPost yesterday. That means the company's value has reached a new high of $87.5 billion, assuming the company still has 2.5 billion outstanding shares. — This closing price marks a $3 rise …
Context & Ripple Effects
Five months after a significantly oversubscribed December 2010 auction cleared at a $56 billion valuation, SharesPost's latest clearing price of $35 a share lifts Facebook's implied value to $87.5 billion on an assumed 2.5 billion outstanding shares — a jump of more than half again in under half a year.
The move lands amid a busy stretch for the company: Facebook is fighting off Paul Ceglia's ownership claim, which it calls a 'cut-and-paste job', while its mobile position strengthens — its iPhone app is the most downloaded in history even though it still ships no native iPad app.
First-order effects
- Employees and early shareholders holding the assumed 2.5 billion shares see paper gains of roughly $3 per share overnight, with the implied company value up about 56% from the December 2010 auction level.
- SharesPost cements its role as the venue where Facebook's price is actually being set, since each successive auction — not any exchange — marks the new high-water figure.
Second-order effects
- Rivals hiring against Facebook now bid against equity that keeps re-marking upward between auctions, raising the retention cost of Facebook's engineering and product staff across the industry.
- Each higher clearing price tightens supply further: holders who watched the valuation climb from $56 billion to $87.5 billion have less incentive to sell at current levels, pushing future auctions toward richer prints like the $102.8 billion one Bloomberg reported for March 2012.
Third-order effects
- If the auction cadence holds, private secondary markets — open only to accredited buyers — become the de facto pricing mechanism for the largest private tech companies, with public investors reduced to reacting to a valuation curve they cannot participate in until listing.
- A sustained gap between auction-implied values and any eventual offering price sets up the structural question that defined this era of late-stage private companies: who captures the appreciation between the last private print and the public debut.
The trend: Private secondary-market auctions are displacing traditional benchmarks by setting the headline valuations of late-stage tech giants well before they ever list.