Facebook gets $200 million from European firm

Facebook announced on Tuesday a $200 million investment from Digital Sky Technologies (DST), whose social networks are market leaders in Europe.

Presuming Facebook is valued at $10 billion, DST's $200 million comes out to about a 1.96 percent stake, the companies said in a statement. DST would not have a seat on the board or hold special observer rights, the companies said.

DST also plans to offer to purchase at least $100 million of Facebook common stock from existing stockholders whose shares have vested. The details of the plan will be announced during the summer.

"This investment demonstrates Facebook's ongoing success at creating a global network for people to share and connect," Facebook Chief Executive Mark Zuckerberg said in the statement. "A number of firms approached us, but DST stood out because of the global perspective they bring--backed up by the impressive growth and financial achievements of their Internet investments."

More than 200 million people, of which about 70 percent are outside the U.S., use the popular social-networking service, according to Facebook.

DST, based in London and Moscow, has investments in Mail.ru, Forticom, and vKontakte.

[theonlybuster]

I've always kinda wondered who says Website-A is valued at X amount of money and how is it determined.
I keep getting the picture in my head of FB saying "Hey this profile is worth $0.05, this one's worth $0.94, but oh this one's worth $2.02"

[DavyBoyWonder]

@theonlybuster

That's not how it's done at all. How much your willing to pay for a percentage is then used to extrapolate the worth of the company. So if your will to pay $10 for 10%, and the company accepts, and your are both arms length entities, then it's stated that the company is worth $100.

That calculation goes out the window when people try screwing around with the valuation, and they're in cahoots, but that doesn't seem the case here.

[jonathan0766]

A company is worth what the next investor / buyer will pay for it, the same is true of the stock market. The DST deal is obviously priced as it is because DST is desperate to get into the US market, and grabbing a piece of Facebook was perceived to be too good an opportunity to pass up. Facebook isn't likely to be worth anywhere near $10 billion outside such a fringe deal. Facebook basically just did what some of the investment banks did to China & the Arabs during the first stages of the economic implosion: convinced foreign investors to pay a high price for the marquee of owning part of an American darling.

[hutwarmer]

when is this pig going to make money? that is when we can start putting a value on it.

[stigmattaman]

In Soviet Russia, Facebook invests in you.

[the_ricochet]

Never turned a profit and worth more than $10 Billion?

[The_happy_switcher]

Worth $10B?--ha ha I can hear that Internet bubble re-inflating.

[strongpimphand]

I've read in Fortune that Facebook hasn't turned a profit yet.

More money invested??? I think common sense should be exercised! Even Microsoft has money invested in Facebook! Should be incorporating Facebook in Windows 7. Until users start clicking on those ads and generating revenue, Facebook is a bad buy. I predict in 5 years we'll be using another social networking tool because Facebook won't be able to flip the burger and the hungry people who bought the meat are going to leave the party.

[drstockton]

Friends, given the poor state of rule of law and the preponderance of hackers, spammers and other exploiters in Russia and former Soviet Union states, maybe we ought to stay the heck away from facebook now; it is just another source of fragments of personal history that can be pieced together for identity fraud.
B. R. Stockton