Facebook's common stock is now changing hands in private sales at about a $4 billion valuation, a source says (unconfirmed). And Facebook CFO Gideon Yu is indeed trying to raise money in Dubai, the source says (also unconfirmed).
As we all know, Microsoft, Li Ka-shing, and some German investors paid a $15 billion valuation for some preferred stock last fall. Importantly, this preferred stock takes precedence over the common: Microsoft will get its $250 million back before common shareholders get a cent (common shareholders will get to split up what's left). So it is inaccurate to say that Facebook's valuation has fallen from $15 billion to $4 billion.
But it seems safe to say that Facebook will have trouble selling preferred TODAY at a $15 billion valuation, given the change in expectations for the company's business outlook over the past year. Perhaps Gideon can find some folks in the Middle East stupid enough willing to pay that.
Facebook's latest round of employee stock options are priced about 5% higher than the prior round, our source says, at a valuation just north of $4 billion. (From memory, the source recalled a strike price of $9.27 per share, versus a prior round of $8.90.)
Facebook's revenue this year will be about $265 million, the source says, which is less than the $300 million expected. The source estimates that this is composed of about $180 million of ad revenue, $50-$60 million of virtual gifts, and some smaller revenue items. (unconfirmed)
A key upcoming event for Facebook will be the renegotiation of the Microsoft advertising and search deal: The source believes Microsoft overpaid the first time around and will therefore try to negotiate a better deal this time. This could hit Facebook's future revenue growth.
NOTE: None of the "unconfirmed" information above has been confirmed. We will be glad to make corrections if it is wrong. Please write to hblodget@alleyinsider.com.
See Also:
Update on Facebook Dubai Fundraising Trip
Facebook Hemorrhaging Cash, Runs To Dubai For Money
