I’ve been shaking my head since reading yesterday that Microsoft is in talks with Facebook to take a stake in the “social utility” darling, not because it doesn’t make sense for both parties (albeit in much different measures), but because the valuation is ludicrous.
Microsoft is reported to be seeking a 5% stake in Facebook, which would cost between $300 to $500 million. I guess Microsoft deserves a stake in the company it’s propping up with an ad deal signed through 2011 which accounts for Facebook’s primary revenue stream.
So, on the strength of this most recent nugget, Facebook’s valuation soars to between $10 and $15 billion, a hefty premium for a company whose publicly reported rounds of funding amount to less than $50 million. Yes, that’s million with an “m”. And yes, if Microsoft kicks in $500 million (also with an “m”), it’s stake will only be 5%.
Funny stuff, especially considering the other rumor of the week so far, i.e. the one that says the investors in Parakey, the little startup Facebook acquired in July of this year, only doubled their investment, while the Parakey founders got lucrative Facebook option packages.
Maybe they call it a social utility because they utilize you, or in regular speak, they use you.
Anshu has a hilarious post on this same topic. Apparently, recent investments have driven his blog’s valuation to $5 trillion. I wonder what we’re worth.