What is Facebook Worth?

More than 50 mutual funds say they own shares of the closely held social-media giant Facebook, according to investment-research firm Morningstar. And some closed-end funds are investing the bulk of their portfolios in private firms, including Facebook. The catch: No one seems to agree how much the shares are worth.

Facebook could file papers for an initial public offering as early as next week, The Wall Street Journal reported, with a valuation of $75 billion to $100 billion. As of the end of 2011, funds had widely differing estimates of its value—and that could have significant implications for investor returns.

Fidelity Investments, which has two dozen mutual funds with Facebook shares, valued the company at $25 a share. T. Rowe Price Group, which has a dozen funds with Facebook shares, valued them at about $31.15. Other funds priced the shares somewhere in between.

Over the past couple of years, small investors have been keenly interested in getting exposure to pre-IPO companies but have had few vehicles for doing so, because the Securities and Exchange Commission restricts the sale of such shares to "accredited" investors with a net worth of more than $1 million, excluding their home, or an annual income of more than $200,000.

The restrictions leave mutual funds and closed-end funds as the easiest avenues for individuals to get a stake in such companies, though the stakes typically are small and diluted among many other fund holdings. But the pricing discrepancies mean that buyers of the funds are effectively paying different prices for their stakes in Facebook and other private firms, experts say.

Lawrence Friend, a former SEC chief accountant, says that in an open-end fund, either the buyers or the sellers will suffer: "You're hurting the purchasers if your price is too high, or the redeemer if it's too low."

At the end of last year, for example, the Morgan Stanley Focus Growth fund had 3.68% of its portfolio in Facebook, valuing it at $27 a share, according to its portfolio disclosure form. At the time, investors could buy the fund at $33.63 a share.

If Morgan Stanley Investment Management had instead used T. Rowe Price's valuation of $31.15 per Facebook share, investors would have had to pay about $33.82 a share of the fund, a 0.57% increase. On the other hand, investors redeeming shares of Morgan Stanley funds made less money than they otherwise would have using T. Rowe Price's higher valuation. By comparison, the Standard & Poor's 500-stock index's return for 2011 was 2.11%, including dividends.

Since the end of the year, Morgan Stanley or T. Rowe Price and other fund companies may have changed their valuations.

A Morgan Stanley spokesman declined to comment. A T. Rowe Price spokesman said the company's fair-valuation process includes a variety of factors, including a company's financial performance and prospects, and subsequent transactions between other parties.

The law allows fund companies some discretion in deciding how to price private companies, says Doug Scheidt, the SEC's associate director of investment management. Some firms use price quotes from third-party brokers, such as SharesPost or Second Market, while others use internal valuation models with multiple inputs.

The Tocqueville Opportunity fund, which had about 1.87% of its portfolio in Facebook at the end of last year and priced the company at $27.90 a share, takes quotes from secondary markets and applies a discount based on illiquidity and share restrictions, says fund manager Thomas Vandeventer.

He says one of the issues he has brought up with the valuation committee is that if Facebook goes public at a premium, "we have a hidden discount."

The lure of private companies has grown stronger since the tech bubble, as high-profile technology firms wait longer to go public, says Kevin Landis, portfolio manager of Firsthand Technology Value, a closed-end fund with almost its entire portfolio in private investments like Facebook and social-media company Yelp. Closed-end funds have a fixed number of shares and trade throughout the day like stocks. Their share prices can deviate significantly from the value of their underlying assets.

The Firsthand fund sells at about $17.25 a share, which the company says is a 30% discount to the value of its underlying assets. But because nearly all of its investments are in private companies, investors won't really know how much those assets are worth until the companies go public, says Geoffrey Bobroff, a mutual-fund consultant based in East Greenwich, R.I.

Mr. Landis says Firsthand uses an outside firm to value its holdings: "We want to have the most accurate values that we can."

The pricing issues mean that investors hoping to catch the IPO wave in a mutual fund have to be wary, Mr. Friend says.

"It's similar to figuring out what your home's worth when you apply for a mortgage," says Tocqueville's Mr. Vandeventer. "We try our best but all have different methodologies."