Facebook has just had a serious reality check. According to an inside source, the social network has just been pegged at $2bn (£1.3bn) by a potential investor, down a staggering 86% from 2007.
In a few years, we think people will look back at Microsoft’s 2007 valuation of Facebook at $15bn (£10bn) as the peak of the web 2.0 bubble. Is today the day that bubble burst?
We know Facebook is on the lookout for more money to keep the servers flowing with photos, pokes and virtual frisbees, but a recent valuation by one company puts it at just under 14% of its worth two years ago.
Michael Arrington of TechCrunch claims an inside source on a fundraising deal with investor General Atlantic says the firm valued Facebook at just $2bn.
This is the same Michael Arrington who said Google was in talks to buy Twitter, mind, and we’ve still seen no evidence to back that one up. But regardless, this valuation wouldn’t come as a surprise to us: Twitter reportedly turned down a buyout offer from Facebook because it was largely based on Facebook stock, and despite Facebook’s phenomenal growth (23% last month alone), it’s still failing to make money, potentially even losing it with every new user.
Will Facebook take a deep breath, cut its losses and accept the money? Only time will tell, but it’s clear that something will have to budge, and soon, before the price has time to drop again.
Out Now | £free | Facebook (Via TechCrunch)
It seems to me they are thinking IPO and need to keep the valuation for money they don’t even really need higher. Problem is, they’ve got themselves spending more time with venture capitalists than they are spending working on how to become profitable.