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.
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.
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.
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.
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.
Copyright © 2014 Microsoft. All rights reserved.
VIDEO ON MSN MONEY
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.