Microsoft overpaid for Facebook
October 25, 2007I can’t believe Microsoft paid almost a quarter-billion dollars for a 1.6% stake in Facebook. The deal values Facebook at $15 billion.
How can that be — it may have a ton of traffic but people visiting a social networking site usually have very low click rates. Because they’re at the site to read up on friends or find new ones. They’re not on the site to click the banner ads.
There’s just no way that company is worth $15 billion. We’re in another Internet bubble. Not as frenzied as the last one and not fueled by individual investors like the last one. This one is being fueled by Google and Microsoft and Yahoo trying to out-bid each other as they jockey for position.
How else to explain the ridiculous valuation? Microsoft just wanted to make sure Google did not get a piece of the action.
If I were a Microsoft share-holder I’d be unhappy right now. The company blew some serious coin and I think got very little in return.