Rumours of the floatation of Facebook have been fuelled by the first investment by a Wall Street bank valuing the company founded in 2004 at $50bn (£33bn). Google, by contrast, is valued at $190bn and Apple at more than $300bn. The floatation is expected to happen next year. It’s difficult to comprehend how such a relatively new business could possibly be worth so much?
Goldman Sachs invest $450m (£290m) in Facebook
The biggest part of the investment came from Goldman Sachs. Alongside Goldman’s $450m (that’s £290m), Digital Sky Technologies (DST), a Russian investment firm and existing Facebook shareholder, put in a further $50m. Facebook is still almost entirely private equity owned – you have to be invited to invest. Facebook investors include entrepreneur Marc Andreessen and Elevation Partners, a private equity firm with U2 leader singer Bono as one of its founders.
Facebook ended 2010 on a high after being ranked the top site by Google and Zuckerberg’s quarter of Facebook may now be worth as much as $14billion. Zuckerberg was Time magazine’s person of the year 2010 not bad for a 26 year old.
The deal caps a remarkable 12 months for Facebook that saw it recruit over 500m users and, according to analysts’ estimates, generates about $2bn in revenues. Mark Zuckerberg said last year that Facebook will float on the stock exchange when “it makes sense.” He rejected a $1bn takeover offer from Yahoo in 2006. Facebook’s cultural and social influence has exploded over the past two years, overtaking Google to become the most visited website last year.
Revenue from Facebook is generated by advertising though this has not deterred users who willingly display a large range of private information on their pages, including photos. Over the New Year’s weekend, Facebook saw 750 million photo uploads from its users. The enormous value that has been estimated for Facebook is directly related to the value of that information, our personal information is one of the most sought after and valuable commodities of this century, and Zuckerberg has it all in his pocket. Now there’s a thought.