Facebook has plans of going public some time soon. Whereas so far, there is virtually no way to gauge how much the company is worth, it now seems that Facebook itself values the company at $75 billion. How do we know that? Well...from the Instagram deal. The deal closed at $1 billion with Facebook paying 30% of it in cash and 70% in stock.
Since Facebook chose to pay 70% in stock, what is intriguing is how did that work out and where did Facebook put the value of its own share. As it turns out, Facebook estimates its stock to be $30 a share, which effectively puts the company at some $75 billion valuation. However, the company is well aware that it could go far beyond that number once it goes public.
“During the negotiations with Instagram, the parties framed the deal around a logical assumption: Facebook could soon trade publicly at a much higher market value. As part of the talks, the companies discussed a potential value of about $104 billion for Facebook, the people briefed on the negotiations said. Instagram’s co-founder Kevin Systrom first broached the number, one of the people said.”
Nonetheless, it seems that it wasn’t without such good reason that Kevin Systrom decided to sell Instagram. A $75 billion valuation is perhaps the lowest that Facebook may value at once it goes public. At maximum, the company is expected to be valued well at $100 billion. So if the latter indeed happens, Systrom is a happy man because his stock will make his deal worth well more than $1 billion.