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EduPristine>Blog>Learn Financial Modeling for Facebook Valuation

Learn Financial Modeling for Facebook Valuation

February 9, 2012

Facebook’s IPO was one of the most intriguing IPO ever and we thought why not cover it and let everybody learn the art of financial modeling via Facebook Valuation.

We have been creating financial models and making them open source. We covered some other hot online properties like LinkedIn, Zynga and Groupon and were close to the final valuation numbers. So we thought let’s try our luck and create a model to for Facebook Valuation and see if we come close this time as well!

The complexity in Facebook Valuation

Valuing real companies is no child’s play. Although we advocate that financial modeling is 90% engineering and 10% art, but that 10% can change the numbers from 1 Bn to 10 Bn (If not 100!). There are so many variables that determine the facebook valuation that it would take me a gazillion words to explain it and you would sleep by then.

The models that we created for other online properties IPO were quite complex. Readers loved it but deciphering them was an issue.

Let’s Start Simple

This time we decided to start Simple. We created a quick and dirty model for FB valuation and found that we got a valuation for Facebook at ~ USD 81 Bn. Now that is close (to what I-bankers are thinking to be the valuation right now)! We open sourced the model.

The First Step: Get historical statements

The first step in creating the model is to get the historical statements in place.

Once you are done, you know your first step in modeling! Tomorrow we will see, how we do these steps and then share the best practices with all!

Come on, Let’s value Facebook and see how rich Zuckerberg is and compare if we can match the current valuation!!

About Author

avatar EduPristine

EduPristine is a member of Adtalem Global Education (NYSE: ATGE), a global education provider headquartered in the United States. Adtalem is a 3 billion dollars (20,000 crores) company that has about 9 institutions and companies with more than 16,000 employees spread across 145 locations. Adtalem takes pride in training 142,000 degree-seeking students all over the world.The organization's purpose is to empower students to achieve their goals, find success and make inspiring contributions to our global community. EduPristine is one of India's leading training providers in Analytics, Accounting, Finance, Healthcare, and Marketing. Founded in 2008, EduPristine has a strong online platform and network of classrooms across India and caters to self-paced learning and online learning, in addition to classroom learning

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