It seems like it is still Christmas for the valuation of Facebook and Groupon. No matter how mixed the year was for the social networking giant, December was a big month for it as it pipped Yahoo worldwide, Google in the US and saw its revenue skyrocket to 2 billion (according to reports). And it is making a strong start to 2011 as well. New York Times reported a few hours back that Facebook has raised money from Goldman Sachs that valued it at $50 billion – that’s more than the likes of Yahoo and eBay!
According to the report, Goldman invested $450 million and Russian firm Digital Sky Technologies(DST) invested $50 million , adding to the 500 million it has already invested in Facebook. Taking the total amount of money raised to 500 million. It is believed that is round of investment is expected to raise $1.5 billion for existing shareholders and there are also indications that the round hasn’t been closed yet. Goldman has the option to sell up to $75million of its stake to DST. It is, apparently, planning to set up an investment vehicle that will allow some if its clients to invest in the company. Not surprising, as I’m sure a lot of investors want in on Facebook before it goes public.
Facebook’s shares are already hot property on the Second Market, along with the likes of Zynga and Twitter. And amidst reports of the SEC’s interest in Second Market’s dealings, opposed by some, this new valuation will raise more questions about a Facebook IPO. Moreover, Goldman’s investment vehicle will make it possible for it to circumvent requirements which dictate that a company with 500 or more investors should go public with their financial results because it will be treated as one investor. This may just spark off more interest from the SEC.
Groupon too is seeing its valuation soar to new heights, though the numbers aren’t as big as Facebook’s they are still very impressive. After rejecting Google’s $6 billion bid, the company has raised close to half a billion dollars at a valuation of $4.75 billion – making it worth more than Twitter (valued at 3.7 billion). DST was reportedly the biggest investor in this round, while Fidelity and Morgan Stanley put some money in as well. New York Times reported that the Daily Deal site was readying itself for an IPO as the company’s valuation has tripled over the last 6 months.
These skyrocketing valuations buck the trend which suggest that valuations in Silicon Valley are bloated and some investors had even got together, earlier in the year, to artificially keep valuations low.
What do you think about these numbers? Inflated? or Good Value? Let us know!
