The National Inflation Association has announced that it believes Facebook will likely start trading this May at a peak valuation of $100 billion and see its market capitalization and share price decrease in value in the years afterwards.

Facebook has successfully grown their monthly active users from 1 million in 2004, to 6 million in 2005, to 12 million in 2006, to 58 million in 2007, to 145 million in 2008, to 360 million in 2009, to 606 million in 2010, and to 845 million in 2011. After achieving compound annual user growth from 2004 to 2010 of 191%, Facebook’s user growth in 2011 declined to only 39%.

If Facebook begins trading with a market cap of $100 billion, Facebook will be trading for approximately 27 times 2011 revenue of $3.711 billion and approximately 150 times 2011 net income of $668 million.

A price/sales ratio of 27 and P/E ratio of 150 is too high of a premium to pay for a company that has just reached 50% market penetration in the U.S. Moving forward, NIA believes in 2012 we will likely see Facebook’s user growth decline to 20%, with its user growth declining to just 15% in year 2013 and 10% in year 2014.

It is unlikely that Facebook will ever be able to achieve the same market penetration in Europe that they have achieved in the U.S. Facebook needs to expand into the Chinese market, but the Chinese government has blocked off access to the social network.

In October of 2007, Microsoft invested $240 million into Facebook at a valuation of $15 billion. In January of 2011, Goldman Sachs’ international clients invested $1.5 billion into Facebook at a valuation of $50 billion.

While Microsoft is set to make a profit of 667% in 4 1/2 years and Goldman Sachs’ international clients are set to make a profit of 100% in just 1 1/2 years, NIA believes that the U.S. financial mainstream media that is currently hyping the Facebook IPO, is setting the general public up to get slaughtered on Facebook’s common stock.

The consumer social networking space has experienced very dramatic growth over the past few years, with Facebook being the dominant leader of the industry. Moving forward, NIA believes that social networking technology will soon begin to revolutionize the workplace in the same way that it changed the personal lives of millions of people around the world.

Recent college graduates, who experienced Facebook’s very dramatic growth first hand, are beginning to enter the workforce and are demanding that their employers adopt enterprise social networking technology at their place of employment.

The enterprise social networking industry is projected to grow 61% annually between now and 2016. Enterprise social networking is expected to grow from being a $600 million space in 2011 to a $6.4 billionspace in 2016. This is similar to the type of growth seen in the consumer social networking space over the past four years.

Although Facebook is the dominant leader in the consumer social space today, there is a good chance that another consumer social company will grow to become larger than Facebook in the future. Back in 2006, many analysts expected MySpace to remain king of consumer social networking forever and projected MySpace to continue rapidly growing indefinitely. Instead, Facebook surpassed MySpace and MySpace was recently sold by News Corp for 94% less than what they paid for it.

The American public needs to realize that Facebook at a valuation of $100 billion has far more downside risk than upside potential. While Facebook’s growth is going to rapidly decline in the years ahead, there are two publicly traded companies in the enterprise social networking space that are positioned for enormous revenue growth moving forward.

The user growth of these two companies could accelerate greatly in the years ahead as major corporations begin rapidly deploying their own enterprise social networks. Currently the enterprise social networking industry is still in its infancy, but by 2016 it is likely that the majority of the largest corporations around the world will be using some type of enterprise social networking platform within their business.

The two major publicly traded companies in this space now are Jive Software and BroadVision Inc. Jive is the industry leader with a market cap of $937.97 million. After subtracting Jive’s estimated net cash position of $200.99 million, Jive’s Engage social platform is currently being valued by the market at $736.98 million.

BroadVision only has a market cap of approximately $153.51 million. After subtracting BroadVision’s cash position of $54.4 million and another $17 million in value for their old legacy products still generating revenue, BroadVision’s Clearvale enterprise social platform is currently being valued at only $82.11 million.

BroadVision is NIA’s latest position. BroadVision just reported that they signed 117 new Clearvale Enterprise customers in 2011, up an amazing 290% from the 30 they signed in 2010. In fact, BroadVision signed 33 new Clearvale Enterprise customers in the 4Q of 2011 alone, which was more than they signed in the whole entire previous year.

Jive hasn’t yet reported their year-end 2011 results, but Jive has reported that they only signed 113 new Engage customers in the 12 month period ending June 30, 2011.

BroadVision’s Clearvale is now growing faster than Jive’s Engage, when at their current share prices Jive is receiving a valuation for Engage that is approximately 9 times higher than the valuation that BroadVision is receiving for Clearvale. Besides BroadVision’s fully featured Clearvale Enterprise, BroadVision also offers a free starter version called Clearvale Express.

Any employee at a company can quickly and easily setup their own Clearvale Express account to use at work. After outgrowing Clearvale Express, companies have the ability to seamlessly upgrade from Clearvale Express to Clearvale Enterprise.

BroadVision also offers a unique Clearvale Passport reseller program, which allows other companies to offer Clearvale to their clients. Softbank, a $30 billion Japanese telecommunications giant, had so much success using Clearvale Enterprise within their corporation that they have now joined Clearvale Passport and are offering both Clearvale Express and Clearvale Enterprise to their partners and clients.

NIA believes that BroadVision’s free starter Clearvale Express platform along with their reseller program Clearvale Passport, gives the company a huge advantage over Jive. In NIA’s opinion, BroadVision has the potential to become a bigger company than Jive in the future.

Image Courtesy of   http://www.flickr.com/photos/jdlasica/

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Facebook has grown impressively over the past year and is said to be worth somewhere near 65 billion U.S. dollars. As the leading social network, Facebook has more than 500 million users worldwide. From January to November of 2010 the Facebook received 8.9 percent of all Web visits in the United States, said the New York Times.

In June, Facebook accounted for nearly one third of all Internet display advertisement impressions in the United States, more than the combined total of Yahoo, Microsoft Corp, Google and AOL Inc., according to a report given by analytics firm comScore. Facebook is now worth more than eBay, Yahoo and Time Warner.

Investors are taking note of Facebook’s financial success and are prepared to put their money into the popular social network site. According to information the New York Times gained through e-mails, Goldman Sachs and a Russian investor recently put about $ 50 billion in Facebook, raising the social network’s worth immensely.

Goldman Sachs and the Russian investor now have an early “claim” on stock in Facebook. And with this large investment, Facebook has more power to recruit top employers and develop new products, according to the New York Times. Additionally, interest in Facebook shown by Goldman Sachs speaks to the might and success of social network site, since Goldman Sachs is considered one of  Wall Street’s “savviest investors.”

Many investors are taking positions for a possible Facebook initial public offering (IPO), after analyzing the viability and recently reports on the company’s profitability.

Reuters said it is expected that Facebook will go public in 2012. Facebook CEO, Mark Zuckerberg, has often declined to comment on the company’s earnings or future business plans. But it is clear that Facebook is facing increased competition from Google in the social sphere.

The search-giant recently released Google+ which reportedly added more than 10 million members in its first two weeks, becoming the world’s fastest growing social network. According to the New York Times, analysts are now confirming that Facebook’s sales volume is around 2,000 million dollars annually.

The social network has doubled its revenue during the first six months of the 2011, compared with the same period in 2010. In the first half of the year, Facebook earned around 1,600 million dollars, as published by Reuters, according to a source close to the social network.

The social network site is on the rise and the public waits in anticipation to see if Facebook will reach out for stockholders this coming year.

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