Is Facebook Worth $65 billion?
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- by Antonio Lupetti
- March 5, 2011
Whenever we talk about Facebook and the numbers relating to the most popular social network founded by Mark Zuckerberg, we always end up being surprised and puzzled by those figures.
Recently, General Atlantic, one of the largest capital investment in the world, has reportedly purchased a block of shares of the company in Palo Alto for a total of $2.5 million.
The investment represents a share of 0.1% of the total value of Facebook, which was estimated by General Atlantic at about $65 billion, some $15 billion more than the $50 billion indicated by Goldman Sachs.
What’s most striking is the constant relaunch of increasingly higher numbers, which revolves around the value of Facebook. Just a few days ago I published this post I suggest you to read: Facebook, Twitter and the new Internet bubble. Facebook does not create or sell services. It is a platform made of 500 million users who exchange information in a relational network deployed globally. Its value grows, on a purely nominal level, month after month at a frenetic and unjustified pace.
Large investors have sensed the deal, be it real or fake. The trend today is to invest, invest, invest. It is a reckless and dangerous tendency that has inflated the financial speculation based on the “virtual economy” out of proportion.
Investors are not business angels. Money and heaven never go hand in hand. Those who put the capital demand a substantial return on investment within a few years. Exit strategies are not mere stylistic exercises aimed at filling a business plan. The trend will become sell, sell, sell, here and now. It will be then that the foundation behind this evanescent castle made of bytes will start to creak dangerously.
$65 billion is comparable to a small financial maneuver of an entire country. One wonders if, behind his unquestioned popularity, Facebook really is worth all that money.
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If I had $65 billion to invest in Facebook, I’d buy 20% of Apple instead.
I agree with you David.
And if I had $65 billion to invest in Facebook, I’d buy 40% of Google and 20% of Apple Inc instead.
Well said David.
Moreover the investors will have different views on the management of the company, which will sooner or later lead to disputes and this may cause a lot of problems for the future development of Facebook.
I love this post every company its rushing to but and but new web startups and companies and the problem its that the mayority of them donut have a serious business plan.
People a every times being add=blinds the most facebook have for get money its there add and i know am one of doze that are allow to surf the web without even look at the adds. That cannot keep up the company and know worths that facebook need to create new attractive stuff to keep there user, because know he its up we donut know in some year who will r emplace him whit something better.
Hope this bumble donut explode and be the second internet bubble.
Get Social. Do Business.
65 billion are you crazy, if i had 65 million i would buy twitter, yahoo, linkedin and rest i would invest in google. Lol
You are right. I agreed with you that it is just a trend. It happened before on friendster and DOA (Dead on Arrival) websites. Facebook just a web platform that’s all. It is not the only place where people can meet each others and exchange information. Soon there will be another web platform being introduce and then the people will migrate over there and forget about facebook. Thus another new billionaire born.
Please correct me if I am wrong.
If I had $65 billion to invest, I would have started my own web design company. This way I can sell services and digital products too. A business man should be innovative and keen to innovate existing things.
A good business man = Innovative
What are your thoughts ?
Maria
Correct me if I am wrong…isn’t it facebook has over 650 million registered users and I bet all those who posted here has one way or another been into facebook. I agree with the outrageous valuation of facebook right now, but 650 million is a bigger market than the the whole united states market. That’s a whole lot of consumers to sell all kind of things. Google is making almost 90% of their revenue from ads and facebook is getting there too…so what’s the big problem for someone investing on a future that has a big potential to return big money on your investments.
I wish everybody would have an open mind and not be to subjected about this companies. Or may be we should stop being too jealous when someone or a company gets successful. Stop being fan boys and start seeing things as they are.
That’s my 2 cents…
web properties are being valued at a very inflated amount. In normal business terms, a business could be valued based on its revenue, however in a lot of these social media platforms dont have any revenue and offer free services.
Seeing as this is new territory, perhaps the idea of “value” is measured in a different way, for example marketing and being able to communicate or send a message to an extemely large amount of people across the world with the click of a button? How much is one of those people worth and how many are there – 500Million was the last count? How much return on investement could each potential user bring to a business?
If the user isn’t paying money in return for use of Facebook, the ROI is 0.
Think of it like this. Let’s say I walked into Walmart every day and then proceeded to walk out with an HD television without paying for it; according to Facebook it’s okay, because there are 500 million users doing this as well. They’ll sell advertising and milk investors to pay for it all.
No. Facebook is not worth 65 billion. It wasn’t worth the 6 billion quoted some years ago. Investors live in a dream world where money grows on unicorns and dragons breathe profit.
I agree with Walden, Facebook’s valuation depends on its users and the market they represents. It’s very difficult to indicate a fare value of non-industrial company. In the early January 2011 there was a rumours about Goldman Sachs: GS’s has offered to its clients a chance to invest in Facebook, valuing it $50 billion. +30% in about 4 month! Not bad considering FB is not a pubblic company yet. If you are interested in something very volatile in non-industrial market, let’s take a look to Majesco Entertainment (NASDAQ: COOL).
Thank you Antonio for this interesting post!
My take on it all is the first set up of facebook where it was colledge students using it all and then sharing thier profile details and that in turn had the viral effect to make facebook what it is today. I could only dream of the turnover that site must do in a day let alone what it will be worth in a couple of years with all the plans they have been put in place. They want email takeover now and imagine then what it will be worth with everyone using it for business/pleasure and dont have to move of the site as alot do now….