Facebook, the most revered and dominant social networking site of the moment, has been freshly estimated to be worth up to $50 billion (£32.2 billion). The estimation came to light after the firm received cash injections from two private investors. The US investment bank Goldman Sachs invested around $450 million along with the Russian firm, Digital Sky Technologies, at around $50 million. In addition, the deal with Goldman Sachs may also enable their clients to invest in the social networking site.
Whilst Facebook is currently a privately owned company, moves such as this pave the way for the company to be eventually floated onto the stock market and become publicly listed. Facebook have stated themselves that this is may be a become a possibility in 2012.
Microsoft already have a 1.6% stake in Facebook, and have a ‘strategic’ partnership in the sense that it’s Bing search engine has been integrated with Facebook search. And with a following of around 500 million users and still growing, there is a rich stream of advertising revenue that could be tapped into.
But some may be wary of the recent valuation. Facebook is already 2 times the value of Yahoo!. In fact the valuation puts the company almost on par with Tesco, Boeing and Kraft Foods, all giants in their respective industries. But where they differ from Facebook is that they own and operate vast real-world assets, and their valuations are partly based upon them. Facebook’s soaring value, along with little real-world assets, shows some similarity to the events preceding the .com crash in the early 2000’s. Will Facebook eventually crash and burn the same way, or go on to prosper?