Facebook’s Latest Valuation: Less than $5B

If you’ve forgotten, just nine months ago, Microsoft purchased a 1.6% stake in Facebook for $240 million. Doing the math from that, the total value of Facebook last October was $15B.

But apparently this possibly-soon-to-be-recession-(though-technically-still-not,-people!) has really hurt the “social utility.” Rumors are circulating on Silicon Alley Insider and TechCrunch that Facebook’s current value is less than $5B—and as low as $3 or $4 billion.

SAI cites rumors appearing in their comments for weeks that Facebook’s value is plummeting—and, more importantly, a source who was offered a 0.25% stake for $12.5M just two months ago. Once again turning to our trusty, rusty algebra, that gives a more recent total value of $5B.

Even more damning, Mike Arrington says that Bill Dagley, the managing director of a fund of high value investors (you know, VCs), is rumored to be shopping around some discount Facebook shares as well:

We’ve been forwarded one email conversation from a source, where Dagley asks if they’d be interested in “buying shares of Facebook from current holder?” Another person who was approached said the asking price was $3-$4 billion. A third source says the total amount of stock being sold is around $30 million.

The seller was never disclosed, but it’s likely a current or ex-Facebook exec who wasn’t required to sign special agreements with investors during the venture rounds. That likely means they can theoretically sell their stock once it’s vested and paid for.

This news comes just days after a court ruled in the ConnectU settlement that the Microsoft deal valuation was “different than the valuation disclosed in the press release”—ie Facebook was never worth $15B.

While a valuation of $3-5B is a much more reasonable figure than $15B for a network that’s still struggling with monetization, it’s also still a pretty mind-boggling figure. What do you think? Is $5 billion asking too much for Facebook?

  • http://widestep.com Keylogger Guy

    I don’t think so, investment in FaceBook would be right step for any company, because social networks are the present and the future of Internet.

  • http://www.seoresults.co.za Web Marketing Man

    It does seem like the facebook phenomenon is losing a bit of momentum. $15 Billion down to $5 Billion is a significant downgrading of perceived value. $5 Billion is still a tidy sum in anybody’s language, it is going to be interesting to observe the trend over the next few months until year end. That should give us a much better idea of where this is heading.

  • http://www.cats-names.net/ Cat

    This future of the Internet!

  • http://www.exposedseo.com/ Mr Marketing

    I think facebook will soon reach its critical mass and die out a little bit. I personally had enough of it myself after initial excitement. There is only this much clicking and tagging you can do.

    Mr Marketing’s last blog post..My way of generating revenue with BANS (Build a niche store)

  • http://www.futurefactory-software.com Warenwirtschaft

    I always wondered why microsoft paid that much for such a small percentage. I think they got into some kind of panic.
    Facebook had about 20 million users when Microsoft purchased its share which makes about 750 $ per users.
    Other user plattforms are for sale at about 6-20 $ per User. So even the actual price is still ridiculously high.

  • Jordan McCollum

    Actually, according to the press release at the time, Facebook had 50 million active users. Wikipedia had them at between 42 and 60 million members at that time.

    Still $300/user is pretty high.

  • http://www.wiiblog.net JohnnyV

    oh well, atleast Microsoft still has Bill Gates……oh wait

    JohnnyV’s last blog post..Nintendo Wii DVD-Playback Gets Delayed?Does Anyone Care?

  • http://www.propertiesmaintenanceservices.com Frederick Annan

    Most internet companies are pretty much overvalued. So is The Face. Why pay that much for them?

  • http://www.cristianoronaldo7.net Cristiano Ronaldo

    I wish we could find out how much revenue Facebook brings in each year. That would help us value them better. I don’t believe Microsoft would be stupid enought to pay 3x the going rate..

    Cristiano Ronaldo’s last blog post..Ronaldo snubbed from Euro 2008 XI

  • http://marketprognosticator.blogspot.com/2007/10/facebook-equals-broadcastcom-equals.html Eric

    Last October, before the MSFT-Facebook deal was announced, I analyzed the deal based on the $10 billion valuation that was being rumored in the media. The growth rates necessary to justify $10 billion were insane. Here they are:

    Growth Rates

    Years 1-5 of 40%
    Years 6-10 of 25%
    Years 11-15 of 15%

    This assumed that the revenue and profit numbers circulating in the media were correct:

    “revenues of $150 million, and profit of $30 million in 2007.”

    Since FB was private, these numbers could not be verified.

    The valuation implied based on a $10 billion valuation and the revenue/profit numbers above were:

    Multiple of 67 times sales and 333 times earnings. This assumes that the $30 million earnings are actual “earnings” and not “adjusted” or “non-cash” earnings.

    The number of users don’t matter if you can’t monetize them.

    Eric’s last blog post..Newsflashr

  • Sam

    I personally thought the $15b valuation was ridiculous and that Microsoft panicked and did not want to get left behind, again. That being said are these supposed emails valid? How is this shareholder selling stock for such a low amount when the company just got valuated just a few months ago at such high multiples. Unless the person is under some serious financial stress, the story does not make sense. the

  • http://www.nmnetworkservices.com Douglas

    And I thought they paid too much for Myspace, $15b does not compair!!

  • http://foolishmumbles.com Top Rated

    While Facebook faces numerous battles in the challenge to monetize, I don’t think the principals are really all that concerned. They’re looking to fundamentally change the way people interact. As long as they stay true to that vision the money will come. And they will have the satisfaction of knowing they had a real impact on the online world.

    Top Rated’s last blog post..The Top 10 Digital Cameras Ripped Apart

  • http://www.carolinapanthersblog.org Carolina Panthers Blog

    That number is absolutely crazy! 15 billion dollars!? It looks like Facebook has officially overtaken myspace as the number 1 social networking site.

    Carolina Panthers Blog’s last blog post..Position Analysis: Center

  • http://www.renaware.org/xbox-games-on-xbox-360/ Tony

    Wow…..the price drops so much within less than a year. Such is internet….come quickly, go quickly.

  • http://www.onlinepaidsurveyjob.com/high-pay-survey-as-an-easy-high-paying-job/ LEP

    $5B? I still can’t imagine that kind of price for a company. But I wont be surprise if it drops further. People from the internet world are a bunch of fickly minded people – we move from one to another fairly quickly…

  • http://www.hanoicharm.com/Hanoi_Boat_Trips.html Mei

    It is hard to do a realistic valuation of a internet company. But at $5b…wow…

  • http://feedoor.com Mamod

    Facebook seems a good deal for any company but still $15b is way too much to pay for.

    From another side I guess this drop in value is good for facebook after losing for connectU :)

  • http://www.web2upgrade.com/TMAX TERENCE MICHAEL LOUW

    WELL WELL WELL IS IT 15B OR 5B WHO CARE`S HOW DOES IT BENEFIT THE USER…AHD WHO DOES ALL THE DATA BELONG TOO AT THE END OF THE DAY..?
    WHAT`S ACTUALLY BEING SOLD..?

  • http://blogoninja.com Chetan

    How can that be possible. I think $5B is so less for a company like Facebook as compared to 15b. But yeah its surely not going to help the users anyway so that be $5b or $5t.

    Chetan’s last blog post..Teaming Up With Other Bloggers

  • DonBueck

    There is a very interesting look at Facebook’s valuation and investment history at http://pedatacenter.com/pedc/blog/view/10

  • http://www.web2upgrade.com/TMAX TERENCE MICHAEL LOUW

    JUST A PLATFORM.NO BIG DEAL..WHO KNOW`S WHAT THERE IS STILL TO COME..BOTTOM LINE..WHOEVER HAS THE HONEY,IS WHERE THE BEE`S WILL BUZZ..!

  • Lawrence Temlin

    There is a very interesting look at Facebook’s valuation on the website of a chicago prof
    http://blog.sebastiengay.com

    I want my money!

  • http://www.efabe.co.uk eFABE

    Something is only worth as much as someone is prepared to pay for it!!! How much would you pay to buy Facebook, would you even want to?

  • http://www.MurfreesboroTownhomes.com Murfreesboro Townhomes For Rent

    I think if it is worth the money then why the heck not pay that much. I think its a bit too much but I don’t know how much they will make off it so who knows.

  • http://www.nmnetworkservices.com Computer Repair

    I have a hard time believing that website like these sell for so much but who knows maybe the advertising is well worth it?

  • http://www.yourseofirm.com/Search%20engine%20optimization%20web%20design.asp?ID=Murfreesboro Web Design

    First off I wonder how many people get stuck on the spam protection question? LOL. I would like to know how much money they make off websites like that after they pay that much for them…any ideas?

  • http://www.path.to/rich/ TERENCE MICHAEL LOUW

    How about raking some money into your bank account..Then we talk about your worth imagine being worth $5 billion..you just mite could be
    [link removed]

  • http://www.nmnetworkservices.com/cabling.asp?id=Nashville Nashville Cabling

    Do you think they are getting out of it what they paid for it??

  • http://tmaxhouse.tk TERENCE MICHAEL LOUW

    SOCIAL IS BIGGER THAN WE THINK….ITS A TRILLION DOLLAR ENTERPRIZE !

  • http://www.nashvillesecuritycameras.com/LCD LCD CCTV Monitors

    not worth it!