Will Facebook stock push value beyond US$4bn?

7 Aug 2008

When Microsoft bought a stake in Facebook last November for US$240m, the social networking site was valued at a staggering US$15bn – unheard of for a company so young and strange given its recent formal valuation, which now puts it at a considerably more modest US$4bn.

It is difficult to know whether this US$4bn is nearer the mark or if it is merely a placeholder value as the firm moves to allow employees to sell stock this coming November, while staying private.

A mere ten months ago, before the Microsoft deal, Facebook had been valued at US$525m, showing how variable and unpredictable valuation can be, but Venture Beat reports that two directors of Facebook and a former executive are trying to sell their stock based on a US$5bn valuation.

Venture Beat also goes on to say that the US$4bn figure may actually be closer to US$3.75bn based on internal Facebook figures as reported to the IRS (Internal Revenue Service).

Whatever the case, come this autumn Facebook employees will have a window of time to buy and sell stock at a set price and make a profit when the value rises in the future.

Meanwhile, Facebook has yet to demonstrate a solid revenue model but has deals with both Microsoft and Google for on-site advertising.

By Marie Boran

Pictured: Mark Zuckerberg, CEO and founder of Facebook, may be selling some of his own shares in the company