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UPDATE 2-Facebook gets $6.5 bln valuation with share sale
Mon Jul 13, 2009 8:24pm EDT Email | Print | Share| Reprints | Single Page[-] Text [+]
Market News
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Oil above $60 as global equities rally
More Business & Investing News... * Facebook employees can sell shares for $14.77/share
* Digital Sky to take 3.5 pct stake in Facebook
* Deal values Facebook common shares at $6.5 bln (Adds analyst comments, background)
By Alexei Oreskovic
SAN FRANCISCO, July 13 (Reuters) - Facebook netted a $6.5 billion valuation for its common shares on Monday, further underscoring the fast-growing Internet social networking site's high rank among technology and media industry heavyweights.
Russia's Digital Sky Technologies said it will pay $14.77 a share for Facebook common stock, boosting its stake to as much as 3.5 percent and valuing Facebook at about $6.5 billion.
While that is below the $10 billion valuation set by Digital Sky's May investment in Facebook, which was for preferred shares, investors have been valuing the social network's common stock at less than $5 billion in secondary markets in recent weeks.
The deal suggests that Facebook has a higher market value than many established media and tech companies which generate significantly more revenue than Facebook, including CBS Corp (CBS.N) and Salesforce.com (CRM.N), as at least one blog pointed out on Monday.
CBS, which had $13.95 billion in revenue last year, has a market capitalization of $4.06 billion and Salesforce.com had a $4.72 billion market cap at Monday's market close.
Facebook is expected to breach $500 million in sales this year, according to board member Mark Andreessen. The company has said it expects revenue to grow 70 percent this year.
At $6.5 billion, DST is valuing Facebook common shares at 13 times expected 2009 revenue, noted JMP Securities analyst Sameet Sinha, well above the 2.2x multiple that is common for online advertising-based businesses and even the nearly 6x multiple of Google Inc (GOOG.O), the No.1 Internet search engine in the U.S.
But Sinha said Facebook's lofty multiple was not completely out of line given the strong growth in sales and users that Facebook is generating amid a tough business environment.
"Those are the things that are really driving the valuation," Sinha said. "Essentially, people's expectations that this could be the next Google."
Facebook recently surpassed 200 million active users on its social network, up from 100 million users less than a year earlier, and vaulting it ahead of rival social network MySpace which is owned by News Corp (NWSA.O).
FACEBOOK EMPLOYEES
Digital Sky, a Russian investment firm, bought $200 million worth of preferred shares in Facebook in May and said it would buy another $100 million worth of common shares from Facebook employees and ex-employees. Continued...
UPDATE 2-Facebook gets $6.5 bln valuation with share sale
Mon Jul 13, 2009 8:24pm EDT Email | Print | Share| Reprints | Single Page[-] Text [+]
Market News
Wall Street set for flat open on spending unease | Video
Global stocks up as Goldman results | Video
Oil above $60 as global equities rally
More Business & Investing News... * Facebook employees can sell shares for $14.77/share
* Digital Sky to take 3.5 pct stake in Facebook
* Deal values Facebook common shares at $6.5 bln (Adds analyst comments, background)
By Alexei Oreskovic
SAN FRANCISCO, July 13 (Reuters) - Facebook netted a $6.5 billion valuation for its common shares on Monday, further underscoring the fast-growing Internet social networking site's high rank among technology and media industry heavyweights.
Russia's Digital Sky Technologies said it will pay $14.77 a share for Facebook common stock, boosting its stake to as much as 3.5 percent and valuing Facebook at about $6.5 billion.
While that is below the $10 billion valuation set by Digital Sky's May investment in Facebook, which was for preferred shares, investors have been valuing the social network's common stock at less than $5 billion in secondary markets in recent weeks.
The deal suggests that Facebook has a higher market value than many established media and tech companies which generate significantly more revenue than Facebook, including CBS Corp (CBS.N) and Salesforce.com (CRM.N), as at least one blog pointed out on Monday.
CBS, which had $13.95 billion in revenue last year, has a market capitalization of $4.06 billion and Salesforce.com had a $4.72 billion market cap at Monday's market close.
Facebook is expected to breach $500 million in sales this year, according to board member Mark Andreessen. The company has said it expects revenue to grow 70 percent this year.
At $6.5 billion, DST is valuing Facebook common shares at 13 times expected 2009 revenue, noted JMP Securities analyst Sameet Sinha, well above the 2.2x multiple that is common for online advertising-based businesses and even the nearly 6x multiple of Google Inc (GOOG.O), the No.1 Internet search engine in the U.S.
But Sinha said Facebook's lofty multiple was not completely out of line given the strong growth in sales and users that Facebook is generating amid a tough business environment.
"Those are the things that are really driving the valuation," Sinha said. "Essentially, people's expectations that this could be the next Google."
Facebook recently surpassed 200 million active users on its social network, up from 100 million users less than a year earlier, and vaulting it ahead of rival social network MySpace which is owned by News Corp (NWSA.O).
FACEBOOK EMPLOYEES
Digital Sky, a Russian investment firm, bought $200 million worth of preferred shares in Facebook in May and said it would buy another $100 million worth of common shares from Facebook employees and ex-employees. Continued...
