Is Facebook really worth $15 Billion?

Is Facebook really worth $15 Billion?

Summary: After last night's announcement that Microsoft had beat rival Google to become a minority investor in Facebook, and with it secure a long term ad partnership, the question on everyone's mind this morning: is Facebook really worth 15 billion dollars? That's how much the social networking site is valued based on Microsoft's $240 million investment, giving the company a 1.6% stake of a $15 Billion pie.

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After last night's announcement that Microsoft had beat rival Google to become a minority investor in Facebook, and with it secure a long term ad partnership, the question on everyone's mind this morning: is Facebook really worth 15 billion dollars? That's how much the social networking site is valued based on Microsoft's $240 million investment, giving the company a 1.6% stake of a $30 $15 Billion pie.

To put the valuation into context:

  • July 05 -- News Corp. acquires MySpace for $580 million. At the time many believed that the media giant had overpaid for the number one social networking site, although Google CEO Eric Schmidt is believed to have told Rupert Murdoch it would turn out to be the best deal of his life. Is Facebook worth over 25 x more than MySpace was in mid 2005?
  • October 06 -- Google acquires video sharing site YouTube for $1.65 billion in stock. Is Facebook worth 9 x more than YouTube was in late 2006?
  • May 07 -- CBS Interactive acquires the music-based social network Last.fm for $280 million. Is Facebook worth over 50 x more than Last.fm?

Perhaps the question of Facebook's worth goes to heart of the longevity and future value of social networks in general. If users stick around and the online ad market continues to grow at the rates expected then all is good and well. Alternatively, as Microsoft's Steve Ballmer ironically pointed out only days ago: "“I think these things [social networks] are going to have some legs, and yet there’s a faddishness, a faddish nature about anything that basically appeals to younger people."

Post-investment, Microsoft says that Facebook's userbase could reach 200 million users, and that alone justifies the valuation.

Perhaps fellow ZDNet blogger Larry Dignan puts it best: "Facebook may be the next Google. But there’s a chance it’s the next Geocities."

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Topics: Social Enterprise, Collaboration

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5 comments
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  • You may mean $15 Billion

    I think if you double check your math they are valuing Facebook at $15 Billion $240 mil / .016 = $15 Billion
    bobj82
    • Agreed

      I agree.
      thepumpkin1979@...
  • Thanks!

    I actually meant $15 Billion. Not sure where I got 30 from (maybe not enough coffee). Anyway, thanks again for spotting the mistake.
    Steve O'Hear
    • an idea

      So if I just get everyone else in Canada to kick in $500...
      ChromeSushi
  • RE: Is Facebook really worth $30 Billion?

    No...it's NOT worth $15 Billion. The entire industry of "online advertising is a $21 billion business in the States" according to a recently published white-paper by eMarketer.com. To say that Facebook is worth 71% of the entire online advertising industry in the U.S. would be zealous at best. Significant? Of course. But let's remember that $15 billion did not change hands here... $240 million did. Just because someone (MS or otherwise) is willing to perhaps overpay to get their foot in the door for a 1.6% stake, doesn't mean it's a realistic valuation in view of the market as a whole. But tomorrow's another story.
    SocialNetwork