Facebook investment 'values firm at $50bn'

[brotherhood of LAN]

[bbc.co.uk...]

Facebook has reportedly raised funds from Goldman Sachs and a Russian investor in a deal valuing the social networking site at $50bn (�32.3bn).

The New York Times said that Goldman was investing $450m in Facebook, and Digital Sky Technologies another $50m.

....

Goldman's involvement will also raise speculation that Facebook might float on the stock market.

Another (earlier dated) source: [dealbook.nytimes.com...]

[Whitey]

That can leverage a lot of monetizable development and activity.

[frontpage]

Shhh... don't tell the grumpy old haters... but...

The deal makes Facebook now worth more than companies like eBay, Yahoo and Time Warner.

It must be all that Farmville, right?

[Tor]

Goldman's involvement will also raise speculation that Facebook might float on the stock market.

In my opinion the shares will float on the stock market this year already.

[zdgn]

So the juggernaut not just rolls on [webmasterworld.com], it rakes in all the cash there is left too!

[wheel]

Facebook has reportedly raised funds from Goldman Sachs and a Russian investor in a deal valuing the social networking site at $50bn

Classic bubble. The site is being valued at how much people will pay to invest in the company, not how much the company makes.

If they can figure out how to monetize the traffic to the extent that Google monetizes theirs, Facebook is worth an obscene amount. Until then, they ain't worth that much. It's pure speculation.

[engine]

If they can figure out how to monetize the traffic to the extent that Google monetizes theirs, Facebook is worth an obscene amount.

That's right on the money.

[maximillianos]

A site is worth what folks are willing to pay for it. Therefore the valuation is real and accurate.

The fact is they can sell the site today for 50 billion based on this recent investment. Until it is a public company, earnings don't matter. It is whatever a buyer will pay.

[wheel]

Yeah. It'd be like saying "I own all rights to all TV broadcasts worldwide". They've got that much facetime. What's that worth?

Right now it's more like they own the rights to all PBS broadcasts :).

[wildbest]

It must be all that Farmville, right?

Correct. It's because of farmville and the like click fraud I've canceled our PPC campaign on FB.

[Calculus]

"If they can figure out how to monetize the traffic to the extent that Google monetizes theirs, Facebook is worth an obscene amount. Until then, they ain't worth that much. It's pure speculation."


Haven't people, no doubt many of them smart, been asking that same question for over 2 years now and nobody seems to be able to answer it correctly.

Perhaps there is no proper answer which probably drops the above valuation by 80% overnight.

Having said that, the above deals are probably part of the IPO marketing plan and are designed to suck people in for an even more heady IPO price.

Remember, the more money there is to be made the more devious Wall street becomes (and they're already very devious when even a $1 is at stake)......

[incrediBILL]

click fraud I've canceled our PPC campaign on FB.

Only ad I've ever clicked on facebook and it was one of the best finds ever.

I actually found a really good reliable and inexpensive building contractor that advertised on facebook to "test the waters" and luckily I was there at the right time to see that ad campaign.

Mostly, I find it a big annoying place where people I haven't seen since high school keep trying to annoy me, and that's worth $50B?

[Demaestro]

speculation that Facebook might float on the stock market.

This is the new American way for execs of companies that aren't going to make huge profits to make huge salaries.

Donald Trump does this all the time, take a money loser like the Atlantic City Casinos, go public, pay yourself a huge amount to be an executive and pass the losses off to the investors.

[ddogg]

Still not generating postive cash flow if they are still taking in more funding. If you can't generate a profit with 500 million active users then I don't know how you'll do it with 1 billion. Seems like they're actually losing more money the bigger they get.

[BillyS]

Having said that, the above deals are probably part of the IPO marketing plan and are designed to suck people in for an even more heady IPO price.

That's exactly what Goldman is doing... My prediction is they will handle the IPO.

[wheel]

Still not generating postive cash flow if they are still taking in more funding. If you can't generate a profit with 500 million active users then I don't know how you'll do it with 1 billion. Seems like they're actually losing more money the bigger they get.

I laughed at Amazon back in the day. They lost money in the early years too. Though at least with them they had a clear product line that could make money.

If I was facebook, I'd be looking at one thing. Sounds like 'ating' and starts with 'duh'.

[GaryK]

Along with 16,242,440 other people I like the Oreos page on Facebook. I wonder what that kind of positive exposure is worth?

[hughie]

What i find scary about this kind of money being invested in facebook is that the core functions of the site,(messaging, wall posts, chat, friends etc) are fairly easy to replicate by a well funded and well built upstart.

Obviously there is a lot more to facebook than that but i can easily see a real challenger emerging over the next 2 years.

[Mrlinux]

I would like to clear out something: Farmville is not owned by facebook is owned by Zynga. So it has nothing to do with it.

[dailypress]

If I was facebook, I'd be looking at one thing. Sounds like 'ating' and starts with 'duh'.

That's what it all boils down to.

The richest website owner in my country is the guy that started the online dating site for the community. His site doesnt have the highest traffic and isnt the most popular; but he simply generates $ millions a year.

Rather than monetizing visitors to 1 cent clicks he charges 30-40 dollars/month for membership.

core functions of the site,(messaging, wall posts, chat, friends etc) are fairly easy to replicate by a well funded and well built upstart.

Obviously there is a lot more to facebook than that but i can easily see a real challenger emerging over the next 2 years.

hmmm... arent there already such sites like MySpace etc... ? Facebook will be around much longer...

Farmville is not owned by facebook is owned by Zynga. So it has nothing to do with it.

Thats correct. But i'd guess facebook gets something out of it.

[Whitey]

With $500m I think it would be easy enough to work out compelling strategic monetization options to engage community. It boils down to buying and selling something/s.

Shouldn't be hard with resources -it's a big audience that is keen to listen. I wouldn't restrict it to things like dating that will struggle to sustain as models change. They will want the high ground like Google and other big players, and fold in secondary offerings and advertising that blends into the social platform.

Some things and partnerships like Groupon / Ebay / OTA's etc etc could fit well and with a more personalised ad platform with personal profile features . Google doesn't do that well in this way , and indeed search preferences could work better directed through Facebook than Google. But that's not what Facebook does ( yet , could be something many years down the track to consider ).

It will become obvious in time - ultimately it will be a no-brainer concept. Their key advantage is the power to network with unprecedented data preferences. How to harness this into a format, and make it happen will be the job of the brightest brains on the planet that the money can buy.

It seems simple and a bit sexist , but - the first thing people like to do is talk. The 2nd thing woman like to do is look good and shop. Let's go shopping together. Then the guys get influenced by the gals .... sort of thing , without being too sexist or simplistic.

[hughie]

hmmm... arent there already such sites like MySpace etc.

Well myspace was the top dog, facebook took over and myspace is fading away, the same could happen to facebook, and quite quickly if the right people get together and find the right funding.

I'm not saying it will be easy to knock over facebook but it is much more vulnerable than someone like google as facebook stands at the moment.

That said, facebook is in a good position to take on google, and maybe that's why they're willing to invest, we don't know what's going on behind the scenes.

[Top_Hat]

Didn't facebook go past 500 millionth user recently

Does that mean every new user adds $100 to the value of facebook.

(or have I done me math wrong)

[StoutFiles]

I can't see how you can value a company that doesn't produce a tangible product so much higher than large companies that do. Ask Facebook users if they'd pay a monthly fee to keep Facebook. The majority would not, and without the majority using Facebook, the others wouldn't either. All the traffic in the world doesn't offset the bandwidth costs if the users aren't willing to leave the site via ads. How can you value something so high that doesn't generate a high cash flow and users can and will jump ship instantly?

But isn't Google in the same boat? Yes, and no. People would not pay to use their search, but Google's profit doesn't lie in search, it lies in AdSense and AdWords...on webpages where people are looking to buy things.

I can only imagine that Facebook in the future (or now, possibly) will be selling user data to companies. Its data is the only valuable product they currently have.

[BillyS]

That said, facebook is in a good position to take on google, and maybe that's why they're willing to invest, we don't know what's going on behind the scenes.

Someone has to explain to me how Facebook is in a good position to take on Google. They have two completely different offerings. If you're talking about Search, then I think you're underestimating Google's lead. Just ask Microsoft how easy it is to take on Google or Yahoo why they gave up...

The FB hype will reel in investors that are looking to make a quick buck. Get in early on the IPO, watch the share price go through the roof then dump the stock when everyone realizes the potential is very limited.

[tedster]

Very well said, BillyS. Facebook needs to find a monetization strategy that fits hand-in-glove with their core functionality. Google did that for themselves with Adwords, but Facebook users are in a very different place from search users.

So far, Facebook's model feels like old school "push" or interruption marketing. That model is already beginning to fail with online natives, and there's no long term future in it. Facebook needs a new "Eureka" moment, but so far they're just recycling.

[aleksl]

Goldman Sachs invested in Facebook, interesting..

Digital Sky is "russian", but it is 75% funded by Goldman Sachs.

[eu.techcrunch.com ]

invterview with Milner, founder of Digital Sky:
Rose: What is it about these goldman sachs people, you�re 75% Goldman Sachs.
[techcrunch.com ]

So, the correct title is Goldman Sachs invests close to $500 mln in Facebook.

Here's another quote from inteview with Milner above

Rose: You think FB will be one of most valuable companies on the internet. what would prevent it from doing that.
Milner: I think FB is important globally because it�s going to be one social graph that is unifying all civilization, maybe with a few exceptions. The company that creates one global social graph will be very important going forward. It will be Facebook, with maybe 2-3 local social networks able to sustain competition long term.

So someone in Goldman Sachs, who controls the US Treasury (last 2 Treasury chairman from Goldman Sachs), received bailout money, and has virtually unlimited funding, is spreading "love" around buying companies...and they see Facebook as an asset. I bet they don't look at it from "start selling" standpoint, they are looking at it from Milner's standpoint - create global social graph. That, and do an IPO and sell a few billion shares, quick 100-bagger for Goldman.

[SevenCubed]

The FB hype will reel in investors that are looking to make a quick buck. Get in early on the IPO, watch the share price go through the roof then dump the stock when everyone realizes the potential is very limited.

It won't stop there, they won't dump the stock per se, they'll dump stock belonging to someone else by short-selling it. Capitalism at its filthy lowest point. The institutional criminals, ahh I mean investors will keep a close eye on the curve and when it is apparent it has reached a peak they will then sell the shares short and continue to siphon money while the shares are on their way down. Short-selling shares is a gimmick that was put in place to entertain white collar gamblers who get bored. It is not based on value or even perceived value -- it's an all-out gambling speculation.

Someone here implied some time back that I was capitalism bashing. I'm not, lest you think so again. I live in a capitalist society and for the most part I am content with it's structure. It's better than most alternatives on this planet. My beef is with individuals and/or companies who use the capitalist platform to launch themselves to new lofty levels of greed and corruption for which there is no definition, except it's closest cousin, capitalism. That is what we are witnessing unfolding here in this Facebook game as the breeding ground is being prepared for the institutional players. In the end, it will unravel at the expense of the middle-class one way or another, it always does.

That's why every time I read someone stating their warm and fuzzy “share holder value” theories it makes me cringe...if only the public had a real idea about what's going on.

77 year old Elinor Ostrom, winner of the 2009 Nobel Prize for Economics, is trying to educate us before it's too late. I hope her economic principles gain momentum to bring an end to Facebook-like abuses.