Facebook Now Worth About $4 Billion, Revenue Light

[weblord]

Facebook's common stock is now changing hands in private sales at about a $4 billion valuation, a source says (unconfirmed). And Facebook CFO Gideon Yu is indeed trying to raise money in Dubai, the source says (also unconfirmed).

As we all know, Microsoft, Li Ka-shing, and some German investors paid a $15 billion valuation for some preferred stock last fall. Importantly, this preferred stock takes precedence over the common: Microsoft will get its $250 million back before common shareholders get a cent (common shareholders will get to split up what's left). So it is inaccurate to say that Facebook's valuation has fallen from $15 billion to $4 billion.

But it seems safe to say that Facebook will have trouble selling preferred TODAY at a $15 billion valuation, given the change in expectations for the company's business outlook over the past year. Perhaps Gideon can find some folks in the Middle East stupid enough willing to pay that.

Facebook's latest round of employee stock options are priced about 5% higher than the prior round, our source says, at a valuation just north of $4 billion. (From memory, the source recalled a strike price of $9.27 per share, versus a prior round of $8.90.)

Facebook's revenue this year will be about $265 million, the source says, which is less than the $300 million expected. The source estimates that this is composed of about $180 million of ad revenue, $50-$60 million of virtual gifts, and some smaller revenue items. (unconfirmed)

A key upcoming event for Facebook will be the renegotiation of the Microsoft advertising and search deal: The source believes Microsoft overpaid the first time around and will therefore try to negotiate a better deal this time. This could hit Facebook's future revenue growth.

NOTE: None of the "unconfirmed" information above has been confirmed. We will be glad to make corrections if it is wrong. Please write to [email protected].

http://www.alleyinsider.com/2008/11/facebook-stock-now-worth-about-4-billion-

 

[Compassion]

I concur, Facebook should haven taken anything close to 15 bllion, but 4 billion may not be possible in two years, however,

if revenue jumps above 300 million per year with a more promising looking forecast - facebook could be worth several billion again

MySpace was sold at a better time in a better climate

 

[fak3r]

Not shocking to hear especially in today's economy

Am I the only one that thinks Facebook is overvalued?

 

[-REECE-]

I'm sure the Microsoft ad/search deal had a lot to do with their initial investment.

Not shocking to hear especially in today's economy

Am I the only one that thinks Facebook is overvalued?

I agree. I really think social media is Bubble 2.0, probably 6-12 months from a POP. I highly doubt Facebook has more than 2-3 years before something newer/better overtakes it. The multiples being paid are absolutely ridiculous and need to come back down to earth.

 

[napa]

Facebook is worth $4 Billion? It's still overvalued.

 

[labrocca]

Besides FB's valuation I personally just don't get the sites appeal. Weird widgets and whatnot. These social sites are getting more and more complex. Maybe I am too old school and just like forums too much.

 

[CamMK27]

I think the Valuation at $4 billion is still overvalued and in a couple of years may not even be worth that much at all as the bubble might burst.

 

[Marck]

I'd never invest in what's basically a glorified forum

I mean, correct me if I'm wrong, but they're just an application, right? They don't have much (any?) real capital to speak of.

 

[netfleet]

The trouble will always be revenue. I'm amazed that they get $300m p.a.

They will never be able to truly compete for targetted advertising with the SE's. There are some fairly clever things you can do as an advertiser (eg target males, 25-40 who live in a certain area) but it just doesn't compare to showing an ad for "Buying a new car?" when someone has just searched Google for "buy new car"

I've advertised on FB for about a year now & the results are pretty awful compared with Adwords, YSM etc.

 

[Kate]

Looks like a dotcom bubble 2.0 in the making to me

 

[fak3r]

http://www.youtube.com/watch?v=I6IQ_FOCE6I

Glad I'm not the only one who thinks Facebook is overvalued

 

[Domagon]

Many advertisers are leery of advertising on social sites due to potentially offensive user content.

In regards to ad performance, pageviews alone don't tell the real story - many views are the same people viewing their own profiles and clicking those of their most popular "friends" for the latest gossip, etc; such use tends to be very focused ...

Ads practically have to be in their face to notice - does Facebook have pop-up and/or flash ads that fly across the screen?

Ron

 

[hotdomains]

I do think facebook can make allot more on advetising.
But time will tell if $4 billion is overvalued

 

[CrazyTech]

Eh, I'd hold off on predicting the imminent collapse of social media, seriously. If anything, you're going to see more social media interwork into existing applications and ideas. Sitepoint actually had a very interesting article on cloud computing and how several free/cloud projects were having trouble with some even closing down. Tough times change business, but tough times and the end of a concept are two different things.

Facebook is a dormhold term on campuses and it's also made its way into the vernacular as a verb. It's obvious that tough economic times are going to turn away potential investors and lower the valuation of any company right now, but I don't think it's anywhere near collapse and I think it's probably worth in the neighborhood of a few billion. I thought the original owner was crazy when he didn't take the huge offer, and still do. However, I think a lot of people don't like/don't understand Facebook and so they write it off. College students are still a good market for the right products, and I think some folks don't quite understand how strong that market segment really is.

 

[eBookCovers]

woooowww.... very revenue light..

 

[-REECE-]

It's a very weak market to advertise on. Facebook mentions it's revenue but doesn't seem to mention what it's actual profit is after what are obviously huge costs to manage the entire operation. I would imagine the P/E is in excess of 20 which is ridiculous for something like this which likely has less than 3 or 4 years before it is overtaken by something else.

Case in point: Myspace -> http://siteanalytics.compete.com/myspace.com/?metric=uv . I would imagine the large majority of the 12 million uniques from the USA which appear to have left over the past year have flocked to Facebook and I'm sure we'll see that with Facebook soon enough.

I really do see social media as the future and think we'll see more and more integration of offline and online life, however I don't think the big players in that are going to be the big players we have today.

Eh, I'd hold off on predicting the imminent collapse of social media, seriously. If anything, you're going to see more social media interwork into existing applications and ideas. Sitepoint actually had a very interesting article on cloud computing and how several free/cloud projects were having trouble with some even closing down. Tough times change business, but tough times and the end of a concept are two different things.

Facebook is a dormhold term on campuses and it's also made its way into the vernacular as a verb. It's obvious that tough economic times are going to turn away potential investors and lower the valuation of any company right now, but I don't think it's anywhere near collapse and I think it's probably worth in the neighborhood of a few billion. I thought the original owner was crazy when he didn't take the huge offer, and still do. However, I think a lot of people don't like/don't understand Facebook and so they write it off. College students are still a good market for the right products, and I think some folks don't quite understand how strong that market segment really is.

 

[jdenwar]

Facebook value dropped to $2 billion:
http://www.techveno.com/facebook-value-drops-from-15billion-to-2billion.html
:D

 

[topnames]

I like that- bubble 2.0 lol

 

[-REECE-]

Oh yes, and Bubble 2.0 it shall be. It even sounds Bubbly, with everyone somehow forgetting it is profit that pays the bills, not revenue. I'd really appreciate an update on what Facebook's actual 2008 profits are if anyone has a reliable source.

I found this from 2007 "Facebook expects to make $30 million profit on revenue of $150 million" (source: http://www.guardian.co.uk/technology/2007/sep/24/news.facebook ). Using the 265M figure for 2008 and extrapolating profitability based on 2007 numbers (and yes I'm perfectly aware there are obvious flaws in doing this), that would suggest somewhere around $43-63M profit for 2008.

Knowing that, the $2 billion figure is still too high imho, much too high. This will continue to fall imho -- I doubt it will be valued above $750M by the time 2009 is done.

I like that- bubble 2.0 lol

 

[Pred]

well if you tried to sell on this forum you'd prob get low $xx offers lol