Why Facebook Insiders Should Cheer New Valuation
Facebook accepted a rumored funding round, taking $200 million from a Russian investment group. The deal values the company at $10 billion, a third less than what the company was supposedly worth a year and a half ago. But it could have been far worse.
The social network's stock has reportedly been valued at far less in private deals. Vested employee shares were said trading in the neighborhood of $2 billion; an internal company appraisal was closer to $4 billion.
So when Facebook founder Mark Zuckerberg told reporters on a conference call today, "the world was in a pretty different place at the time" of the Microsoft deal, he knew what he was talking about. The valuation announced today should be high enough to give some insiders pause about taking advantage of the chance to sell their shares back to the company at $10 per share, the same as the Russians paid, per a recent buy-out program.
(Whether anyone should buy his the CEO's line about the new money being "pure buffer," unnecessary to get the company to cash-flow positive in 2010, is another matter.)