Is Facebook worth $50bn?

According to recent investors who has provided an extra $500m in funding, the value of social networking phenomenon Facebook is now $50billion.  For a business with annual revenues of just $2billion is this valuation massively over-hyped?  What has happened is that Goldman Sachs and some Russian investors have paid $500m for a 1% stake in Facebook.  To get to the business valuation, simply divide $500million by 0.01. BBC Technology correspondent Rory Cellan-Jones has provided this accessible analysis and evaluation of the $50billion valuation.  It is an excellent example of analysis for students to take and apply to their exam case studies as well as providing the base for discussing Facebook.  For more strategic analysis, this Guardian article is also worth a read.

Should you buy Facebook shares? [17 May 2012]
Revision Quiz - Sources of Finance for a Startup [12 May 2012]
Takeovers and Mergers: Facebook & Instagram in News Clips [14 Apr 2012]
Instagram - the business with no revenues, worth $1bn [9 Apr 2012]
Mark Zuckerberg - the richest person in the world! [11 Feb 2012]
Buying-in to the Facebook culture [5 Feb 2012]
Strategic choice: What should Facebook do with cash from the IPO? [30 Jan 2012]
Corporate longevity: the lessons from IBM’s 100th birthday [14 Jun 2011]
MySpace and the product life cycle [27 Mar 2011]
How two Econ/Business departments are using Facebook with students [14 Feb 2011]
BUSS1 Revision Quiz - Sources of Finance for a Startup [13 Dec 2010]
MySpace v Facebook - Can the MySpace CEO really change strategy successfully? [3 Dec 2010]
Revision Games - Sources of Finance Definitions [1 Nov 2010]
Aims & Objectives: Twitter and Facebook both aim to reach 1 billion users [12 Oct 2010]
The Social Network - the Facebook Business Story [30 Aug 2010]
Tutor2u on Facebook [24 Aug 2010]
Did you know?  Private and Public Companies [27 Jul 2010]
Lesson Worksheet - Financing Business Growth [16 Jul 2010]
Tracking the popularity of global brands on social networks [13 Jul 2010]
Forget vouchers or stamps - give your customers some shares… [9 Jun 2010]
Revision Presentation - Balance Sheet Basics [30 Jan 2010]
Source of finance - SMEs turn to the private alternatives to banks [27 Jan 2010]
Revision Presentation - Raising Finance for a New Business [30 Dec 2009]
Is Friends Reunited in freefall? [2 Aug 2009]
MySpace Makes Space to Change [16 Jun 2009]
Q&A - What are the main things to consider when obtaining finance for a start-up? [26 May 2009]
Q&A -  What is share capital [2 May 2009]
Innocent turns to Coca-Cola to finance international expansion [7 Apr 2009]
Q&A - What is the difference between long-term, medium-term and short-term finance? [1 Apr 2009]
Social networking and the product life cycle [5 Mar 2009]
Fraser’s Jam unlikely to get stuck in 2009 [28 Dec 2008]
8megapixel cameraphones threaten the digital camera market [27 Aug 2008]
Apple overtakes Google as the new King of Silicon Valley [22 Aug 2008]
How much would you pay for a fish & chip shop? [9 Aug 2008]
Protecting a business idea - Scrabulous under fire [2 Aug 2008]
Cash flow problems could mean its a wrap… [26 Jul 2008]
Bill Gates knocked off the top spot in the ‘World’s Richest’ rankings [6 Mar 2008]
The Social Network that Friends Forgot [27 Feb 2008]

BUSINESS TEACHER RESOURCE NEWSLETTER
Get first news of business teaching resources, ideas and other materials from tutor2u. Over 9,400 business teachers from the UK and around the world receive our regular teacher email newsletters. Sign up for free here!