Tuesday, August 26, 2008

Social Network Valuations Reach Record Levels

I wrote back in March about AOL's acquisition of Bebo and the (inflated) purchase price they splurged for it (USD$850m). This, you may remember, equated to $38 paid per Bebo user.

Now an article in Mashable.com suggests that frenzied interest in social networks is taking these frothy valuations to new heights, and that Facebook's 100m users are worth at least $150 each based on the company's estimated value of USD$15bn.

Clearly, the exact calculation of Facebook's theoretical value remains a mystery, but by all accounts makes it the most valuable social network in the world and sets the marker in terms of premium valuations.

CEO Mark Zuckerberg, whose personal stake is worth an extravagant USD$3bn., must be rubbing his hands with glee. And execs at Microsoft must be praying that their investment in 2% of the company pays off strategically.

Meanwhile, market analysts anticipate that Facebook has the capability to continue expanding its user base to over 200m members, which would ramp up its value even further...someone please prepare the smelling salts...