I recall Fred Wilson talking about how his then partner Jerry Colonna always tried to peruade him that Web business were different when it came to valuations… I think that is quite representative of all new media types: be it bloggers, executives etc., that we sometimes forget that sure, you can extend the rules and fundamentals of finance and valuation considerably when you shift the focus online, but ultimately, it needs to make sense.
What on earth am I talking about? Today I read CNN Money’s Paul LaMonica’s talk about Facebook’s rapidly rising valuation.
To that end, Richard Barton, the CEO of real estate information site Zillow, said during the same panel discussion that he’s been getting many more friend invites from Facebook than LinkedIn as of late.
So could Facebook parlay this buzz into a huge sale of the company? After all, there was speculation earlier this year that Yahoo! (YHOO) was considering a $2 billion purchase of the company after Facebook allegedly turned down a $1 billion offer from Yahoo last year. But Levchin, speaking with me at lunch after his panel discussion, said he now thinks the company would fetch much much more.
He said that Microsoft (MSFT) probably could get a better bargain for Facebook if it wanted to buy it since the company has a close online ad selling relationship with Facebook. Levchin said Microsoft might be able to work out a $5 billion purchase of Facebook. But he said that if Google (GOOG) or Yahoo wanted to buy the company, they might have to pony up $10 billion.
$10 billion! Are the bubble days back? Well, venture capitalist and Facebook board member Peter Thiel said late last year that he felt the company may be worth more than $8 billion. Given the source though, this estimate obviously has to be taken with well, 8 billion grains of salt.
Then again, for every 5 Facebook boosters, you get two denigrators. I’m personally in both camps: in some ways, I clearly see Facebook as where many an impressive firms before their massive tipping point; but I also see a case of the Friendsters, a potential missed opportunity. Can Facebook find that billion dollar idea and scale it? I don’t know, cause I don’t actually know anyone within the walls to make an educated guess. It’s one thing to tickle the fancy of the social networking crowd, it’s another to make a $10B business out of it.
Of course, as a publicly traded company, this is all moot. Its valuation is not even what VCs have pegged it at each round, it’s simply what someone will ultimately pay for it to bring liquidity to its shareholders: that could be in an IPO, or in an M&A.
Let’s just take a peak at how fast things have moved in the Facebook mania:
And who is responsible for this alledged bidding?
And we’re not including Barry Diller’s ill-fated attempted, either.
Note, I was almost going to include Peter Thiel’s $8B volley, but that was a call for the company to be worth $8B by 2015… so while Thiel was then sounding loopy, suddenly, the man with the Midas touched might have hurt Facebook’s prospects? Yeah, don’t count on it.
Related:
- Why Facebook’s VCs will Fund Facebook App Developers
- Facebook OS: Be careful what you ask for
- Facebook 100M users, a matter of when, not if
- Facebook: IPO vs. M&A.
- Facebook’s 2008 to do list: File for an IPO.
- Should MSFT Turn its Attention to Facebook?
- Peter Thiel: Facebook is Worth $8B.
- Murdoch: “MySpace worth $6B”, if so, then break up FIM!
- Facebook to be worth $2.35B by 2010.
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