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GSV Takes Stake In Facebook, Valuing It At $70Bn

28 June, 2011

Investment fund GSV Capital Corp has taken a small stake in Facebook that values the world’s No. 1 social networking site at about $70 billion.

The investment fund said on Monday that it had bought 225,000 shares in Facebook at an average price of $29.28 each.

Facebook has roughly 2.4 billion outstanding shares, according to the latest data from secondary market company Sharepost.

Facebook executives have said it is inevitable that they will take the company public, but have not specified a date.

Founded in a Harvard dorm room in 2004 by Mark Zuckerberg, Facebook threatens Internet stalwarts like Google Inc and Yahoo Inc as it becomes one of the most popular destinations on the Web.

It is poised to overtake Yahoo for the biggest slice of U.S. online display advertising dollars this year, with more than $2 billion, according to research firm eMarketer.

Facebook is one of the most anticipated initial public offerings, with investors to clamoring to get a piece of the social networking site with more than 500 million users.

At $70 billion, Facebook would be valued slightly below Amazon.com Inc, Cisco Systems Inc or Hewlett-Packard Co.

But concerns about Facebook’s white-hot growth have surfaced in recent months. A group of Facebook shareholders is trying to sell $1 billion of stock on the secondary market in a transaction that also would give the company a value of about $70 billion, Reuters reported in April.

Woodside, California-based GSV Capital invests in high-growth, venture capital-backed companies. The $6.6 million investment in Facebook represents about 15 percent of GSV’s total portfolio, the company said in a statement.

Representatives of Facebook and GSV Capital were not immediately available for comment.

Shares of GSV Capital were up 20.3 percent at $12.35 in morning trading.

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1 Comment
Akshay Chaturvedi . 6 years ago

This day was bound to come..sooner or later! However, contrary to how the private equity firms feel, I believe that the bubble is bound to burst..sooner or later as well.

We had hi5, a very popular social networking domain, which ended up at the mercy of spamming. Orkut died a death of non – exclusivity .( My opinions are based as per a regular user since years and I speak in accordance to Indian demography) ..

Facebook, has remained there because of two important reasons :

1. It constantly changes itself every few weeks and that makes the users all interested and excited about it again.

2. It has evolved into much more than social networking, what with popular applications like FarmVille and to top it, they have now launched a similar product to LinkedIn, called Branch Out, which is seeing great popularity in a short time.

But, there are solid reasons on which I rest my case. One, there are chances of better competitors. China,for example, has had its own version of Facebook, way popular now!

Two, and by far the most important, in the last few weeks, Facebook has shown the same signals which led to the down fall of hi5 and Orkut, i.e. spamming and non exclusivity. A few weeks back, many people (almost everyone) reported upto 150 notifications, all of which was spam, what more, there are many of them , which are virus inflected and may break down your computer.

Putting that in perspective, I differ with the view held by majority of Private Equity firms and investors at large. This one’s tempting for short gains and arbitrage if it comes up with an IPO right here, but I have my doubts over it becoming a long term steady investment choice for millions, unless the really smart people at the helm of Facebook come up with enterprising solutions 🙂

GSV Takes Stake In Facebook, Valuing It At $70Bn

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