You're worth whatever someone will pay for you. If no one will buy you, you're worth discounted future cash flows.

Edit: I like volida's methodology better.

I would argue that Facebook's value hasn't dropped - it just never was that $15bn. Microsoft was paying for an ad contract along with the ownership share. So, it was probably always valued at what is now becoming the quoted value.

I think that slowly facebook's value will drop as they continue to rely on their high valuation without making significant revenue.

The sad part, is that thanks to the market crash its still worth as much as the entire General Motors, You know general motors with its tens of thousands of employees, dozens of plants that are worth billions of dollars, 100% name recognition, worldwide market penetration, etc etc.

Tidbit along the same lines from the article below: the combined market cap of American, United, Delta, Continental, Northwest, and US Airways is $5.7 billion.

http://www.wired.com/cars/futuretransport/news/2008/07/portf...

That's not sad, that's just a good opportunity to buy GM shares.

update: Actually I just checked and GM is still worth 5.85 billion.

The figure at which Facebook values itself internally doesn't matter. Determing Facebook's true value, based on its potential, is impossible.

PB on the potential of Facebook's data set:

http://paulbuchheit.blogspot.com/2008/04/facebook-knows-who-...

reality=market value/num_of_competitors; potential=reality/hope;

bubble=d(value)/d(time);

if (potential <= bubble) bubbleburst();

We can't understand that. It doesn't look like Arc, or any other Lisp!

Facebook's perceived value drops $11.25bn.