How Zuckerberg can become the world's richest man

Facebook's stock needs to hit a certain dollar amount for its young CEO to gain the title.

By MSN Money Partner Jul 24, 2014 2:22PM
Credit: © Robert Galbraith/Reuters

Caption: Facebook CEO Mark Zuckerberg addresses at Facebook's f8 developers conference in San Francisco, Calif. April 30, 2014By Jay Yarow, Business Insider

We doubt this is Mark Zuckerberg's goal in life, but if he wants to be the richest man in the world, Facebook's stock has to go to $200. 

We got that number from Bloomberg wealth reporter David de Jong on Twitter


He says at $200 Zuckerberg (pictured) would overtake Bill Gates as the world's richest person -- assuming all things stay the same as they are now. (De Jong was responding to a tweet from NYT columnist Farhad Manjoo.)


Facebook's (FB) stock is trading at around $76 Thursday, so it needs to almost triple. Facebook's current market cap is $195.4 billion. If the stock went to $200, Facebook would be worth over $500 billion. For some comparison, Apple (AAPL) is currently valued at $580 billion. 


Can Facebook do it? Can it reach $500+ billion? 


When Apple broke through the $500 billion barrier, it was doing about $33 billion in annual profit which was a 15X price to earnings  ratio. That's roughly in line with market as a whole over time. Price to earnings (P/E) is approximately how much an investor has to pay for $1 of earnings. It's a way to compare the value of stocks to each other.


However, the better comparison for Facebook might be Google (GOOG), which is a software/Internet company. Apple is viewed as a hardware company, so it has a tougher P/E ratio. With a $401 billion market cap, Google has a P/E of 31, and earnings of about $13 billion. 


Facebook currently has a P/E of 98, and its trailing 12-month profits are $1.91 billion.


If we use Google as a comparison, and Facebook's P/E eventually contracts to 31, then net income has to reach about $16.1 billion, about an 8X increase from where it's at today. If we use Apple/the market then Facebook has to get its net income to $33 billion, which is 16 times where it's at today. 


Can Facebook get there? Certainly! 


Facebook has only scratched the surface of its potential. The core business' revenue is still growing at 61 percent on a year-over-year basis. It's sitting on Instagram, which could be another advertising juggernaut, and it then there's WhatsApp and Facebook messages. Plus there's Oculus and who knows what else Facebook can think of.


So while it may not be his goal in life, Mark Zuckerberg can very conceivably become the richest man in the world. 


More from Business Insider

65Comments
Jul 24, 2014 4:37PM
avatar
Facebook is a waste of time and slows your computer speed like nothing else. FB is kind of like living in high school again. Silly stuff!
avatar
He lied, cheated and stole. It's not hard to be rich with no ethics!
Jul 24, 2014 4:06PM
avatar
Lesson too be learned? Steal someone's idea, get sued in court, then go public.
Jul 24, 2014 4:03PM
avatar
He's has no chance, and Bill Gates is not really the richest guy in the world, either.

They make these silly calculations by taking the latest trading price and multiplying it by the number of shares these guys own.

Problem is, they could never, ever liquidate all those shares AT THAT PRICE. They couldn't even liquidate all those shares period.

Bill Gates tens of billions of dollars in MS stock is just as real as that equity you had in your house in 2005. If it isn't realized, it doesn't exist.
Jul 24, 2014 4:56PM
avatar
FB at $200, now that's a really scary idea!
Jul 24, 2014 4:58PM
avatar
There is something wrong when the richest people and companies don't make a product. The story goes that back in 1929 Bernard Baruch decided to get out of the market when he received a stock tip from a taxi driver ( or shoe shine boy).  I often wonder if we are the edge of another financial precipice when people earn billions for producing nothing.
Jul 24, 2014 4:37PM
avatar
Its not the title but what you do with your blessing that counts.
Jul 24, 2014 6:46PM
avatar
I understand Facebook is LOSING subscribers. Why is it I think this story is a plant? Investors are not stupid for the most part. And the competition is kicking the spit out of Facebook in terms of movement related to subscribers. And where the subscribers go, the advertisers follow. Sorry Facebook. This ain't gonna work.
Jul 24, 2014 2:52PM
avatar
strange new world. o he can now afford to buy a nba team?
Jul 24, 2014 7:51PM
avatar
Mark ****erberg  Facebook is an invasion of privacy. Everything posted goes right to the CIA that uses face recognition software and does all kinds of stuff with your pictures.  I deleted my account. Bye bye
Jul 24, 2014 5:01PM
avatar

He's has no chance, and Bill Gates is not really the richest guy in the world, either.

 

Umm, you really need to go look up Cascade Investments on the web. You'll see that Bill Gates has already sold almost all of his Microsoft stock and invested in many other enterprises. Now FB Mark has a very long way to go before he's crowned.

 

Jul 24, 2014 8:32PM
avatar

It will blow up sometime, and be worth pennies. So many people have extra accounts. Catfish stuff. So they can play games. I would say it has less than half the stated users.

 

Jul 24, 2014 8:17PM
avatar

Face Book is here today and gone tomorrow.  It was a creative piece of software. It contains no Hard Physical realistic material.

It's an after thought.  It has contributed to social media and people have been ridiculed, harassed, embarrassed, lost jobs,

been divorced, in accidents, accused of Slander,  because of Face Book.  A good idea that went sour. But Zuckerberg has made money

like the person who created the "Pet Rock".   Just shows people are gullible and ignorant or naïve and foolish to buy into trash.

I have not ever used FB or created an account.  So how and where is all this money coming from? - The Taxpayers are paying him...ouch !   Next up is "Bit Coin" as it will bite you in the a _ s.   Another invisible item of processing money that does not physically exist. Sorry, but I'm going to sell everyone "AIR" .... pay up folks so you can breathe and live another day in Hell.

Jul 24, 2014 9:40PM
avatar
Never, I mean NEVER happen.  I wonder how long it will be before investors (and consumers) dump this vaporware that actually has no real value at all ?  
Jul 24, 2014 7:32PM
avatar
Can you say bubble? For those who are interested in buying into a company with a P/E of 98, expecting it will go much higher, I'd like to offer you a chance to own a bridge over the Mississippi river.
Jul 24, 2014 6:25PM
avatar
Pride of the Amer-Nazi socialist party, F'm and feed him beans.
Jul 24, 2014 10:23PM
avatar
He'll end up being the richest or 2nd richest next to Gates (MS) because he's sold his soul to the NSA & gov intrusion. Just another conduit for surveillance.
Jul 24, 2014 7:39PM
avatar
For Facebook stock to go that high, it would most likely mean that the market as a whole is up quite a bit. And if that happens, then Bill Gates' net worth will increase substantially as well.
Jul 24, 2014 10:23PM
avatar
Apple has a product an investor can get behind...Facebook is a ghost company with a lot of hype. BTW...Facebook may soon be outdone by no less than Twitter...it goes to show the volatility of these kinds of companies. 
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123
123 rated 1
262
262 rated 2
480
480 rated 3
651
651 rated 4
649
649 rated 5
629
629 rated 6
616
616 rated 7
496
496 rated 8
346
346 rated 9
111
111 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
EXCEXELON CORPORATION9
TAT&T Inc9
VZVERIZON COMMUNICATIONS8
CTLCENTURYLINK Inc8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.