Facebook's Lower $10 Billion Valuation Shows Investors Will Still Pay Up-the-Nose For Hope
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Following Digital Sky Technologies' $200 million investment in Facebook, for a 1.96% stake, the social media company can now boast about a lower-but-still-remarkable $10 billion valuation.
Today's assigned $10 billion valuation is less than the $15 billion valuation that was assigned to Facebook back in October of 2007 when Microsoft (Nasdaq: MSFT) bought a 1.6% stake in the company for $240 million. But that was pre-apocalypse, and before it was fully known that it wasn't going to be easy to monetize social networking.
Make no mistake about it, Facebook's new $10 billion valuation is an impressive feat. The $10 billion valuation makes the company worth more than such well-known names as Starbucks (Nasdaq: SBUX), Alcoa, Inc. (NYSE: AA) and Campbell Soup Co. (NYSE: CPB). In fact, the new valuation of Facebook makes it worth more than 310 of the S&P 500 companies, according to data from Bloomberg.
To illustrate what investors will pay for the company's potential or hope, Facebook is expected to post revenue of a measly $300 million this year, which compares to an expected $9.7 billion at Starbucks, $16.9 billion at Alcoa and $7.63 billion at Campbell. Of course those companies have slowing or flat revenue growth.
Facebook is still private, but a possible IPO for the company has been bantered about for years. With today's news, Digital Sky also said it is planning to offer to purchase at least $100 million of Facebook common stock from existing common stockholders. This move will provide liquidity for current and former employees', and takes away some motivation for a swift IPO. But that being said, with the new Digital Sky investment and other past rounds, investors will likely be clamoring for the company to go through with the IPO process. I would be surprised if Facebook doesn't file its S-1 within the next 12-18 months.
Today's assigned $10 billion valuation is less than the $15 billion valuation that was assigned to Facebook back in October of 2007 when Microsoft (Nasdaq: MSFT) bought a 1.6% stake in the company for $240 million. But that was pre-apocalypse, and before it was fully known that it wasn't going to be easy to monetize social networking.
Make no mistake about it, Facebook's new $10 billion valuation is an impressive feat. The $10 billion valuation makes the company worth more than such well-known names as Starbucks (Nasdaq: SBUX), Alcoa, Inc. (NYSE: AA) and Campbell Soup Co. (NYSE: CPB). In fact, the new valuation of Facebook makes it worth more than 310 of the S&P 500 companies, according to data from Bloomberg.
To illustrate what investors will pay for the company's potential or hope, Facebook is expected to post revenue of a measly $300 million this year, which compares to an expected $9.7 billion at Starbucks, $16.9 billion at Alcoa and $7.63 billion at Campbell. Of course those companies have slowing or flat revenue growth.
Facebook is still private, but a possible IPO for the company has been bantered about for years. With today's news, Digital Sky also said it is planning to offer to purchase at least $100 million of Facebook common stock from existing common stockholders. This move will provide liquidity for current and former employees', and takes away some motivation for a swift IPO. But that being said, with the new Digital Sky investment and other past rounds, investors will likely be clamoring for the company to go through with the IPO process. I would be surprised if Facebook doesn't file its S-1 within the next 12-18 months.
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