Facebook Value Plummets $5bn

Facebook has sold 1.96 per cent of itself to a Russian technology investment firm for $200m, according to The Register. That puts Facebook’s ostensible value at $10bn, a $5bn drop from the price tag Microsoft put on the company in October 2007.

On Tuesday, Facebook announced that Digital Sky Technologies (DST) – which owns Russia’s largest website, Mail.ru – made a $200m investment in its social networking dream in exchange for preferred stock.

According to a recent analysis by Data Center Knowledge, Facebook is spending somewhere between $20m and $25m a year on data center space alone. And as of the beginning of November, unnamed sources said the company was spending “well over” a million a month on electricity and “likely” another $500,000 for bandwidth, as shameless social networkers post billions of photos and other solipsistic pixels.

Meanwhile, it’s unclear how much revenue the company is pulling in via advertising. According to The New York Times, chief executive Mark Zuckerberg says that Facebook’s revenue is growing 70 per cent year-over-year, and he’s confident the company will be cash-flow positive in 2010. But its costs are surely growing at a rapid rate as well. The site received 307 million visitors in April, three times the number it received a year ago.

Zuckerberg said that DST’s investment will “serve as a cash buffer to support our continued growth, allowing us to scale”.

Digital Sky also plans to buy at least $100m of Facebook common stock from existing stockholders to provide liquidity for current and former employees with vested shares in the company.

This entry was posted on Wednesday, May 27th, 2009 at 2:56 pm and is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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