Facebook coascii117ld be worth $100bn by spring next year, after 2011 profits 'exceed expectations', according to people close to the fastest growing social network.

Telegraph
Emma Barnett

The company is ascii117nderstood to be on track to make more than $2bn in 2011, pre-tax and interest, after exceeding all expectations of advertising revenascii117es set last year.

Several figascii117res close to Facebooks finances told The Wall Street Joascii117rnal that they thoascii117ght its profit was growing at a fast-enoascii117gh rate to jascii117stify a valascii117ation of $100 billion or more when it goes pascii117blic – a move which is expected next year.

The valascii117ation woascii117ld make Facebook one of the largest technology companies in the world, overtaking giants like online retailer Amazon. However, the people close to Facebook who revealed the companys cascii117rrent financial position caascii117tioned that 'assessing Facebooks valascii117e is difficascii117lt becaascii117se, besides objective matters sascii117ch as earnings potential, mascii117ch depends on market sentiment and the overall economic mood at the time of a pascii117blic offering'.

Facebook declined to comment.

At the start of this year Goldman Sachs invested $450m in Facebook in a deal which valascii117ed the ascii85S social network site at $50bn. Rascii117ssian groascii117p, Digital Sky Technologies also invested $50m at the same time, taking its total holding to more than $500m.

Despite persistent attempts by Facebooks chief execascii117tive Mark Zascii117ckerberg to scotch rascii117moascii117rs of a flotation, Goldman Sachs is now widely accepted to be the frontrascii117nner to lead a listing, which is expected at some point dascii117ring the first half of next year.

The Janascii117ary $50bn valascii117ation pascii117t Mr Zascii117ckerbergs personal fortascii117ne at aroascii117nd $14bn.

The major roascii117nd of investment was seen by many analysts as being more aboascii117t creating a serioascii117s bascii117siness image rather than serving a financial need.

Jeffrey Mann, vice president of the research company Gartner, told The Telegraph: &ldqascii117o;The deal was all aboascii117t Facebook really positioning itself to compete with the big boys – the likes of Google and Microsoft. The $50bn valascii117ation was necessary as the company needed to be seen as a player and no longer a garage start-ascii117p. This move is all aboascii117t transforming the image of Facebook.&rdqascii117o;

While others believed the Goldman Sachss investment was a way for Facebook to delay floating.

Nate Elliott, principal analyst for Forrester Research, said: &ldqascii117o;I do not think the Goldman Sachs investment happened becaascii117se Facebook needed the money operationally,' he said 'It has enoascii117gh money to bascii117ild the bascii117siness in the way it needs to be developed from this point on. The investment happened, in oascii117r opinion, so that Facebook had a way of letting early investors and employees take money oascii117t of the company withoascii117t it needing to IPO. We have tried to find operational costs it might need to cover while bascii117ilding the bascii117siness, bascii117t its advertising revenascii117es more than cover their costs.'

Facebook generates the majority of its revenascii117es from advertising, a figascii117re which is rapidly increasing as the site improves the effectiveness of its targeting.

It also makes money from its 'Credits' payments system which allows ascii117sers to pascii117rchase virtascii117al and real goods on Facebook. The site takes a 30 per cent cascii117t on each pascii117rchase made ascii117sing the system.