How do analysts calculate the real $$$ value of Facebook as being in the billions?

[Mack Del Patrick]

With the ipo a done deal, we're hearing in the news that fb's value is in the $billions range. Exactly how is this assessed/determined/calculated?

[justme]

The assessment is based on revenue from advertising. The real value will be decided on the price of each share, when it is floated, and the total number of shares issued.

[Jovial Joanne]

The counts the money From advertisers. With some 800 million users, the costs of advertising on Facebook must be rather high.

[John W]

Once a company is public and it's shares are traded then it's value is the total number of shares issued multiplied by the share price provided that the market is efficient. As to determining value from cash flow, there are a lot of assumptions to be made as to how those cash flows are to be continued and increased but if you could know the future cash flows then a comparative value to other investment opportunities can be made with discounted cash flow.