The famous Mark Zuckerberg, CEO of Facebook.com is now estimated to be worth between $3 billion and $5 billion but what does he do now that he has his $15 billion valuation of FaceBook?
Whats more amazing about that $15 billion figure is that FaceBook does not have a proper revenue model or direction to where to go next. It’s estimated that it turns over $150 million and is extremely profitable but with such a low turnover why is it still getting its $15 billion valuation!?
One reason why it’s valued so high is thanks to Microsoft and its bid of $240 million just for 1.6 percent of the company. Microsoft’s aggressive bid has gotten the market talking about Facebook. And on top of that $240 million is just spare change for Microsoft’s $6.6 billion in the bank. But why inflate the value with such a ridiculously high offer?
Evidently Microsoft’s aggressive behavior is to block Google’s fast past advertising growth and purchase of various internet companies like YouTube.com from growing and dominating the advertising market. With a poor last quarter and profit loss for MSN, Live Search, Messenger and Hotmail; Microsoft is on the move to take over Facebook to pump up its online advertising market share. Thus the lucrative deal with FaceBook.
The whole band wagon for FaceBook is riding on next year’s ad network which is rumored to be the key to their advertising success. “Wherever audiences go and people spend time, that becomes an advertising medium,” says Analyst Charlene Li.
But theirs is a trend that search engine users then to click on sponsored advertising more often than on social networks. So how will FaceBook help its sponsors benefit and profit from their relationship? I guess we’ll have to wait till they launch the ad network and wait.
A very smart and experience business man Lee Lorenzen CEO of Altura Ventures suggested a shopping application for users to create their own online store, “effectively bringing online ecommerce to FaceBook. It’s not rocket science to put together a bunch of merchants in one shopping cart.”
Unless FaceBook keeps up its lucrative, positive and fast growth this $15 billion company could drop in value sooner than you think. So good luck and keep up the awesome work Mr. FaceBook!