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How inflated Facebook and Zynga?

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In the past year from the econophysics Swiss Federal Institute of Technology have carefully studied the possible value of the stock corporation Facebook, which estimated in the $ 65-100 billion

According to them, it’s complete nonsense, considering how much money the company can squeeze out of the 750 million users of its social network (as they were at the start of the study). Scientists proposed a more realistic estimate – $ 15-30 billion – given the fact that on average, with each user will be received one dollar of profit, as well as the condition of moderate growth in the coming years.

 

Now the duo turned into a trio by a colleague named Tsalan Forro, set his sights on another social-networking company – Zynga Which out the stock market a few months ago, and whose market capitalization is now estimated at about $ 8 billion

The most interesting is that before an IPO in the press appeared very different estimates, and analysts were slow to provide justification for their numbers. Some spotted on the ceiling as much as $ 14 billion

Scientists decided to find in this chaos something reasonable, a method to calculate the actual value of the company and even to predict its changes.

It turned out that Zynga is much more difficult to assess than Facebook, because its success is closely linked to the increasing popularity of certain games, but because it can not be modeled by a single function. Therefore, researchers have put at the heart of the company’s rate of innovation, ie the speed with which it produces new hits.

The experts concluded that the basic cost of Zynga is $ 3.4 billion, and even with very high growth companies do not exceed $ 4.8 billion

The fact that the market for Internet companies is a new generation of dangerously inflated bubble they say and some analysts say. Probably, here the principle of “an even greater fool”: yes, I buy the shares at an inflated price, but I know an idiot who pays more.

We all know how that ends. The question is only one thing: the bubble will burst before or after the IPO of “Facebook“?

Results of the study are available at the site arXiv.

Based on the materials Technology Review.

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