Facebook worth $5bn less as recession bites
Wednesday 27 May 2009
The Russian investors Digital Sky Technologies (DST) paid $200m (£125m) for a 2 per cent stake in Facebook yesterday, valuing the social networking site at $10bn – or two-thirds of what it was worth 18 months ago.
Facebook, which was founded in 2004 and remains a private company, sold a 1.6 per cent stake to Microsoft in October 2007 for $240m. That investment valued the whole company at $15bn.
The social networking site, which has more than 200 million users, said last night that DST was also looking to buy $100m of stock for existing shareholders. DST will not get a seat on the board.
Mark Zuckerberg, the chief executive of Facebook, said the deal with Microsoft was part of a larger partnership and that it had been signed at the "absolute peak of the market".
The company said the value of the company had fallen because of "changes in the economy" which was in line with the rest of the market. The move to raise cash is part of a plan to fund growth, and Mr Zuckerberg pointed out that the company did not have to raise the extra money.
Facebook said it had been approached by "a number of firms" over a potential cash injection but had chosen DST, a Russian group that specialises in internet investments, because of its "global perspective".
Mr Zuckerberg added that the company was not actively looking for any other investments at this time.
DST is based in Moscow and London. It is the largest investor in Russian-speaking and eastern European markets, but the Facebook stake is its most high profile international move.
Mr Zuckerberg, who started Facebook when he was studying at Harvard University, said yesterday that despite the move to sell the almost 2 per cent stake, the company was in "no rush to go public any time soon". The group turned down a $1bn takeover attempt from Yahoo in 2006. Mr Zuckerberg added that the company expects to be "cash flow positive" by next year.
- 1 Howard Jacobson: Let's see the 'criticism' of Israel for what it really is
- 3 Belgium fan Axelle Despiegelaere lands L'Oreal campaign after World Cup viral photo
- 4 Britney Spears sings 'Alien' without Auto-Tune in embarrassingly brilliant leaked audio clip
- 5 PornHub begs users to stop uploading video clips of Brazil getting beaten 7-1
Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
Instagram of US airport security chiefs: Lipstick knives and IED training kits among items seized
‘Ryan Gosling got someone pregnant and it's not me. Brazil you think you’re devastated…’
Israel-Palestine crisis: ‘We just want it to end… We don’t deserve to live like this’
Israel-Palestine crisis: Eight killed in Gaza Strip cafe while watching World Cup semi-final
Sustained immigration has not harmed Britons' employment, say government advisers
Australia facing international condemnation after turning around Sri Lankans at sea
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
There’s a nasty smell in the political air – and it’s coming from the Tories
Vanessa Feltz criticises 'vile' reaction to Rolf Harris allegations
iJobs Money & Business
£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...
£60000 per annum: Harrington Starr: A leading provider in investment managemen...
£600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...
£30000 per annum: Harrington Starr: A global leader in trading platforms and e...