Everyone knows Facebook, (mostly) everyone has Facebook, but do you know how much the social networking mega giant is really worth?
The last benchmark number we have seen concerning Facebook was the $240 million investment Microsoft made in the still privately held company.
CNET.com makes an interesting argument: Facebook's perceived valuation keeps climbing and climbing and climbing right up to its 240 million investment by Microsoft. It's not until, perhaps not coincidentally, the departure of chief financial officer Gideon Yu and the stronger likelihood of a new investment round that Facebook's valuation starts to climb again.
The company’s main problem strikes a chord in the heart of YouTube big cheese’s as well. The company has no problem getting eyes on its website, but is struggling in their ability to generate revenue. Think about the number of times you go on that site vs. the number of times you click on an advertisement. Most of them seem pretty dull, and with the risk of malware and viruses hiding around every click, users are even more tepid then usual about visiting an unknown third party site.
This fact makes investors (while still in office, Yu tried to drum up investments from Dubai, as well a large Russian communication company, Digital Sky Technologies, which eventually invested $200 million in the company) weary of putting their money into a company with no definitive business model.
Despite the companies flaws, the sheer number of users, and the fact that Facebook is so far out of the social networking league makes it almost immune to the criticisms dogging the company. In today’s business world, a platform that is able to dissect and target demographics as easily as FaceBook is an advertisers pie in the sky, and has them chasing after a slice of the 8 million people who type in www.facebook.com every single day. The article pegged the most recent figure at a $6.5 billion valuation, with each share of the common company stock going at $14.77.
In the difficult economic climate, Facebook has been able to supplant its competitors, evolve over time, and say no to household Internet names (Yahoo, Microsoft, the first time) and is being rewarded with big money investments in what still remains a murky future for a company that is arguably, still trying to find itself.
Really interesting article. All of the valuations I've seen of Facebook have varied a ton since the company is grows all the time. And thanks for talking about YouTube... so true about clicking on links and being weary of malware! I never thought about this before, but those companies don't really have clean business models, and while they've been incredibly innovative, it's strange to think that they're struggling.
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