Like many frothing at the mouth online analysts and social networking ravers, Pete Cashmore suggests that Zuckerberg is right to act like he’s in no rush to sell Facebook, but this is silly. Zuckerberg is playing high stakes poker and he has a LOT to lose – certainly hundreds of millions if Facebook hits any major snags or if some newer and hipper online community takes root. I suspect he knows this but is loving the game, and I certainly admire this young whippersnapper for that and for creating such a magnificent web community. Magnificent, but only “worth” a fraction of the 1+ billion Cashmore suggests Facebook is now worth as an independent business.
But then what do I know, I traded my Apple for WCOM back in the day.
I do think Google will now scarf them up as part of their “empty the lake of big fish” marketing strategy, and I predict they’ll pay about 1.1 billion, but this is the luck of timing by Zuckerman, not a market based assessment of the value of Facebook as an independent entity, which everybody seems to be wildly overestimating. YouTube’s the same situation, where it’s value is not in streaming 100,000,000 crappy videos per day, rather in the fact that it helps Google, now awash in high valued stock, consolidate their position as the key online advertising leader.
The funny thing is that the *same rationales* used in 1999 are rearing their silly heads again, and only a handful of investors are noticing this. Unlike 1999 there are now many *real companies* out there with moderately long and profitable online histories, but ironically they appear to be very undervalued compared to the more speculative plays.