Face it, Facebook isn’t even close to being worth what’s going to get paid for it


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.

About JoeDuck

Internet Travel Guy, Father of 2, small town Oregon life. BS Botany from UW Madison Wisconsin, MS Social Sciences from Southern Oregon. Top interests outside of my family's well being are: Internet Technology, Online Travel, Globalization, China, Table Tennis, Real Estate, The Singularity.
This entry was posted in advertising, blogs, companies, facebook, myspace, news, personal, search, Web 2.0, Websites, yahoo, Youtube. Bookmark the permalink.

4 Responses to Face it, Facebook isn’t even close to being worth what’s going to get paid for it

  1. “Zuckerman 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.”

    Can you really lose that which you never had?

    It’s kinda like when advertisements tell you to buy something because you’ll “save.” 🙂

  2. joeduck says:

    Well, I’m assuming numbers were bandied about by Yahoo and others and he could almost certainly have sold for
    (I’m guessing) over $800,000,000.

    So yes I do think he should consider as a loss or a gain (from any time T at which he could have accepted an offer of X dollars) the difference between X and the final sale price.

  3. tomo says:

    uh…

    Zuckerman?

    I’m not sure if that is a typo, an oversight or a pimp slap on Zuckerberg.

    🙂

  4. joeduck says:

    It was an oversight … correcting now… but I like “pimp slap” so much we gonna call it that!

Leave a Reply to tomo Cancel reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s