Facebook Valuation Rises to $50 Billion as Goldman Invests

Facebook's value has been debated since late 2007 when Microsoft (MSFT) bought a 1.6% stake in the social network, which valued it at $15 billion. The quickly growing firm had almost no revenue back then. Now, Facebook's value has shot to more than three times that as Goldman Sachs (GS) and Russian investment firm Digital Sky Technologies put money into the company based on a $50 billion valuation. Goldman will take a $450 million stake, and Digital Sky, which already holds a position, will invest $50 million, according to The New York Times.

The new valuation of Facebook is less than five times that of Microsoft, which reported $63 billion in revenue in its last fiscal year and $19 billion in net profit. Microsoft also has $36 billion in cash and short-term investments on its balance sheet. Facebook's revenue is estimated at between $1 billion and $2 billion, and is said to be very modestly profitable.

The valuation reflects the future expectations for a company that already has 500 million users worldwide and has barely tapped huge markets like China and Russia. Facebook will almost certainly use the money for expansion into new markets. The social network's audience is roughly the size of Google's in the U.S. It carries over 25% of all online display ads available in its home market.

However, one threat to the valuation is that Facebook might find its growth stymied in some foreign markets. It is, for example, not allowed to operate in China at all. Without a Chinese presence, it may not take long for the $50 billion valuation to be reconsidered.

Increase your money and finance knowledge from home

Income Investing

Grow your nest-egg.

View Course »

Investment Strategies

What's your investing game plan?

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:

Wall Street is getting so fictional in investments!~!!

January 03 2011 at 5:04 PM Report abuse rate up rate down Reply

advertising advertsising advertising is all our country can do ...?????

January 03 2011 at 5:03 PM Report abuse rate up rate down Reply

Wow!! We live in a country that value idiots who place Happy Birthday greetings or photos of Fido on Facebook over other depressed industrial stocks likke you know what??? Ohn you dont know??

January 03 2011 at 5:02 PM Report abuse rate up rate down Reply

STAY AWAY .. RUN don't WALK RUN FAST .. GOLDMAN SACHS will SHORT an IPO while brining FB to market and they EAT YOUR LUNCH .. that is how GOLDMAN SACHS DESTROYED USA HOUSING market.

January 03 2011 at 12:34 PM Report abuse +1 rate up rate down Reply


January 03 2011 at 9:57 AM Report abuse +1 rate up rate down Reply

I wish I had thought of this! Http://www.bestbankruptcysite.info then I wouldn't be in the predicament I'm in!

January 03 2011 at 9:28 AM Report abuse rate up rate down Reply

how, exactly, is facebook worth an incredible $50 billion?
its a website that works poorly.

January 03 2011 at 9:04 AM Report abuse +2 rate up rate down Reply

How do you pay taxes on a valuation? How much is the tax rate on 50 billion?

January 03 2011 at 8:40 AM Report abuse +2 rate up rate down Reply

I so sick of ads on every website. such a pain in the ass. Please have less ads!!

January 03 2011 at 8:37 AM Report abuse +2 rate up rate down Reply

50 Billion is preposterous. It just makes lying wall street more giant unearned commissions. It's just press releases and the failed educational system of the past 35 years that makes all the morons (85%) say, "Ah, yah man awesome,coolllll).
It is over for this country.

January 03 2011 at 8:36 AM Report abuse +2 rate up rate down Reply