It’s time for this week’s round of the Facebook valuation game! Yesterday Henry Blodget reported that wealthy investors have been trading shares at around $5.50 which gives Facebook an approximate valuation of $2 billion. The only person crying about such a decrease is Microsoft, but then again Microsoft isn’t exactly short on cash. Owen Thomas at Valleywag states:
The market price is falling fast. We’ve heard of shares trading for $5.50, which suggests a valuation for Facebook of around $2.3 billion, but that’s the highest. There’s plenty of interest for shares at prices between $2.50 and $4 — though those are distressed prices. At the low end of that range, Facebook would be worth a mere $1.3 billion — less than a tenth of the price at which Microsoft invested its $240 million last year.
We previously wrote about Accel’s new billion dollar round of funding and how part of it could potentially be for getting Facebook another round. That was just speculation though but remember we’re playing the “Facebook Valuation Game!” The favorite parlor game of Silicon Valley entrepreneurs (and internet entrepreneurs that happen to be situated here in D.C. 
).
David Kirkpatrick posted a comment on my Accel post last week saying that the Valleywag speculation was highly inaccurate. Rumors often turn out to be true though and in Mark Zuckerberg’s interview with Mike Arrington it appeared as though Zuckerberg was admitting the company was getting more money. He stated “We’re not actively going around trying to raise money from a lot of different people. It’s more just a follow on to that [previous round].”
Maybe what has been taking so long is the lack of a desire of investors to invest at the $15 billion valuation and a lack of a desire on Facebook’s part to sell at a lower valuation. Whatever it is, it’s all speculation! And that’s it for this week’s round of the Facebook valuation game!
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Facebook is WAYY over rated and WAYY over valued, especially in our terrible and dwindling economy (thanks to mr bushy and others)…I predict the fall of Facebook in the coming months, MySpace has definitely stepped up their game incredibly, and they have great customer service, unlike Facebook….
Comment by Adrian Eden — December 17, 2008 @ 2:16 pm
A bargain at $2billion.
Comment by Michael McGimpsey — December 17, 2008 @ 9:11 pm
I'd have to agree with you Michael
Comment by Nick ONeill — December 17, 2008 @ 10:11 pm
Nick– what I wrote here and on my own blog at http://www.facebook.com/thefacebookeffect was never that facebook might not be seeking more money. I am certain it would love to raise more, and there are clearly plenty of people flogging fb stock out there at various prices. My main point was that Silicon Alley Insider, not Valleywag, was wrong in saying that fb was in need of a "bailout" or needed a "hero–and it's gotta be soon." That suggests there is a near term financial crisis at facebook which I strongly believe not to be the case. Facebook's valuation surely has declined precipitously as has that of every company on the planet since its Microsoft/Li Kai-Shing financing round last year which happens to have taken place at the very peak of the market. Facebook will not raise substantial if any sums at that $15 billion valuation any time soon. However, for preferred shares at a much lower valuation I am certain there will be plenty of buyers, if fb is willing to go low enough. And even as low as that might be, it will quite likely still be high enough to result in relatively little dilution for the founders and original funders of fb, who have seen remarkably little dilution, ever. (and btw the fb connect implementation is not working for me)
Comment by David Kirkpatrick — December 18, 2008 @ 7:02 am