Assuming earnings of $205M per quarter and a valuation of $100B, that would put Facebook's P/E ratio at 122. Today, Apple is at 16.3, Google at 18.1, Netflix at 24.4, and Microsoft at 11.7. Now, it's completely possible that Facebook's earnings growth will outstrip those more established companies. However, it does show that one has to think Facebook will grow its earnings at a considerably faster rate than those companies to be a good value at a $100B valuation.

Myself, I don't see Facebook necessarily going the way of AOL and MySpace. Facebook's engineering chops are a lot better. Sure, there's an amount of social lock-in that they shared with AOL and MySpace, but that isn't the only thing keeping Facebook on top right now. Facebook has made sure that their site runs well - a minimum of errors, predictable and decently speedy response, and a willingness to address technological challenges that keep the site humming. While we might lambaste Facebook a bit from a social perspective, they've open sourced some genuinely good tools and seem to be sticking to their technological guns. Unlike MySpace, AOL, and Yahoo, Facebook isn't morphing into a company where "media" types run the show. While the social aspect is very important for Facebook, I think there's a more engineering-centric or engineering-friendly culture that will persist there like it has at Google. I don't see the higher-ups at Facebook thinking "oh, I get the cool stuff the kids today are hip to and I just need some peon programmer to translate my awesomeness into computer speak. All programmers are interchangeable cogs, right?" I think that does speak to Facebook's longevity. In technology, you need to be able to improve your product, not just keep the lights on.

However, Facebook relies on non-technological factors more than Google or Apple. Facebook needs to remain the place people sign up when they join a social network. It isn't too hard to imagine Facebook becoming the place known as the hangout for people's parents. As someone in my twenties, I'll probably have teenagers in 15-25 years (a decent number of my friends will in 15 years). Will they want to be on the social network that I'm on - the social network of my generation? It's already weird to me when old people sign up for Facebook. I don't want to "friend" my actual friends' parents. Frankly, I'm a (slightly) different person when I'm talking to my friends and when I'm talking to my friends' parents. Likewise, Facebook is treading a thin line on sharing. In the early days, Facebook was very closed and putting something on Facebook felt more private. Facebook has been slowly changing that to the point that I wonder whether I should just edit myself a bit more and publish publicly rather than on FB in a more formal way (ie. a blog). Finally, people could just get tired of it. I'm finding less interesting things in my newsfeed as time goes on. I find that I don't feel like posting as much.

For me, Facebook's valuation at $100B seems high given its earnings. It's PE ratio is above 100 and so one has to assume much more growth than other very good companies. It might happen. However, I think Facebook faces a decent amount of uncertainty in its future. It's well-engineered and well-run compared to those who have failed that we might point to as Facebook's future, but with a social product there's more than just having good service and any number of things could hurt Facebook from privacy concerns to becoming the network of the people who went to college from 2000-2015 while younger folk find a different place to digitally hang out. I wouldn't compare them to AOL, Yahoo, or MySpace, but I'd still say Facebook's valuation is quite high.