Approaching stagnancy: is Facebook overvalued?

Research firm eMarketer is forecasting that, this year, 90 percent of social networkers will visit Facebook at least once per month, and roughly half of North Americans will do so. Since inception, Facebook has boasted incredible triple-digit growth rates year-over-year. However, eMarketer’s numbers suggest only a 13 percent increase in users this year—and the firm believes this will dwindle to a single digit growth rate next year.

Facebook is valued at about $50 billion, but its revenues don’t justify this by any means. The valuation is a based on Facebook’s ubiquity, its addiction factor, and its future potential. But is it even possible for the social network to catch up to its valuation if growth is already becoming stagnant?

Unless Mark Zuckerberg’s company finds a way to fully penetrate major overseas markets like Asia, which is always easier said than done, the website is poised to experience remarkably flat growth—ultimately, there are only so many people on this planet that will adopt Facebook, and North America is fast closing in on its cap.

So does this mean Facebook is overvalued at $50 billion? Currently, yes. But of course there are ways to solve this, primarily by creating new revenue streams. Facebook needs to become more than a social network to earn its price tag; the “Facebook Phone” is one start, but Zuck and his team will need to get innovative, or the company’s IPO (which has been discussed might occur around 2012) may be the first blow of helium into the next tech bubble.