Does anybody else think this logic is crazy? I believe Facebook's two major financing rounds were for $13M and $25M (see http://www.startup-review.com/blog/facebook-case-study-offli...). Given those numbers, they couldn't have taken that much money out compared to what they would be able to take out in a $6B acquisition. We're talking like a 1:500 ratio.
And they may not "need" anyone right now, but that doesn't mean they shouldn't sell at that price or that they don't have real risks to their business. There is always risk in moving forward, and in their case, I think there is a whole lot of risk. Their perceived valuation is tied up in (a) continual increases to their traffic; (b) continual dominance in the college age group; and (c) longer-term, in their creation of real earnings. Any perception that they will not deliver on any of that and the offering prices will immediately drop off that ridiculous multiple.
Firms like Google may not care about their earnings, but I think other firms like Microsoft, Viacom, and Yahoo do, and if those firms fall by the wayside, the ultimate sell price is going to go way down. Of course, they could IPO too. But they should do it quickly while they are still hot.
And they may not "need" anyone right now, but that doesn't mean they shouldn't sell at that price or that they don't have real risks to their business. There is always risk in moving forward, and in their case, I think there is a whole lot of risk. Their perceived valuation is tied up in (a) continual increases to their traffic; (b) continual dominance in the college age group; and (c) longer-term, in their creation of real earnings. Any perception that they will not deliver on any of that and the offering prices will immediately drop off that ridiculous multiple.
Firms like Google may not care about their earnings, but I think other firms like Microsoft, Viacom, and Yahoo do, and if those firms fall by the wayside, the ultimate sell price is going to go way down. Of course, they could IPO too. But they should do it quickly while they are still hot.