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“Facebook is Overvalued” says Bloomberg Poll

By Business Desk; published on January 28, 2011 at 3:03 pm

Goldman Sachs recently invested $450 million in Face book in a deal which valued the website business at $50 billion. However 51% of respondents to a recent Bloomberg poll say the firm’s valuation signals the “beginning of a dangerous new bubble”. The poll was conducted by Des Moines, Iowa-based Selzer & Co. for Bloomberg and has a margin of error of plus or minus 3.1 percentage points.

Facebook raised $1.5 billion in a Goldman Sachs-led financing round in January 2011. In addition to Goldman Sachs’ $450 million investment, Russia-based Digital Sky Technologies put up $50 million and Goldman Sachs clients outside the U.S. bought a $1 billion stake in the company.

According to Bloomberg, Goldman Sachs retained the right to sell $75 million of its stake to Digital Sky but had originally offered Facebook shares to its U.S. clients in a private placement. That was called off after details became public because the offering risked running afoul of U.S. securities laws.

The $50 billion valuation puts Facebook in league with the publicly-traded Tencent Holdings Ltd., the Shenzhen, China-based internet company whose services include online games and instant messaging that is worth more than $42 billion on the Hong Kong stock exchange. Tencent trades at about 15 times revenue. The Facebook valuation is about 25 times its 2010 revenue. Google’s price-to-sales ratio is 9, Bloomberg’s analysts estimate. eBay’s market value is $40.5 billion and Yahoo!’s is $21.2 billion.

LinkedIn Corp., a Mountain View, California-based professional networking firm, has now filed with the Securities and Exchange Commission to raise as much as much as $175 million in an initial public offering.

Posted by Business Desk on January 28, 2011. Filed under Investment Banking. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

News Tags: Bloomberg, Digital Sky Technologies, Facebook, Goldman Sachs, Investment, Tencent Holdings Ltd..

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