The most recent trading in the secondary market valued (unlisted) Facebook at $50 billion - more than venerable sites such as eBay or Yahoo, and within sight of Amazon's c$80 billion. Since this latest valuation is little short of fifty times Facebook's estimated 2010 revenues of $1.1 billion, it raises the question of what has to be believed about Facebook's prospects for that valuation to make sense.
A quick comparison of Facebook with its approximate peers - major consumer technology retailers, websites and especially social networks - shows a chasm between the value placed on the revenues of other companies versus pure social networks. (Revenues rather than profits are used throughout because profits at Facebook are unknown.) But the things we have to believe for a valuation of $50 billion make sense just aren't all that wild.