Investors may like Facebook, but it is richly valued – Sageworks CEO

Facebook’s initial public offering, scheduled to begin trading on May 18, will have a rich valuation compared to other big tech players, according to Sageworks CEO Brian Hamilton, a noted expert on privately held companies.

“To put Facebook’s valuation in perspective, if Apple, which manufactures tangible products, was valued at a multiple comparable to Facebook, Apple’s market capitalization/value today would be approximately $2.7 trillion,” Hamilton said, noting Apple’s current market capitalization is about $500 billion. 

Facebook’s annual revenue in 2011 was $3.7 billion, and its IPO value is estimated at $95 billion, resulting in a multiple of about 25 times sales, according to Hamilton.

“When Microsoft went public, its valuation was over $500 million, and its trailing annual sales were $140 million, a multiple of approximately 4,” he said. “Investing in the Facebook IPO may turn out to be a great investment, but, right now, the stock is clearly not a bargain, independent of revenue or customer acquisition forecasts or a new optic based upon a cloud computing environment.” 

Through its cooperative data model, Sageworks collects financial statements for all types of private companies from accounting firms, banks and credit unions. This proprietary data provides a unique window into the performance of privately held companies.