Russia’s Digital Sky Technologies want to invest another $100 million in Facebook common stock and have said they are willing to pay $14.77 a share which pushes the valuation of Facebook to around $6.5 billion.
Digital Sky Technologies already invested $200 million in preferred shares in May, which gave them a 1.96% equity stake in Facebook. The latest investment, when complete, will give Digital Sky Technologies another 1.54% and push their total take up to 3.5%.
Recently, investors had been valuing Facebook stock at somewhere between $10 and $10.50 a share which would put the company’s value at $4.7 billion according to Managing Director of SecondMarket Adam Oliveri.
Back in May, Digital Sky Technologies valued Facebook at around $10 billion but that was for preferred stock, common stock doesn’t carry the same guarantees or value hence today’s lesser valuation of $6.5 billion.
What it means for Facebook investors and employees now is that they will finally be able to offload some of their shares for cash.
Facebook did try to create a program last year which would enable employees to sell shares but it was put on hold, apparently according to some reports, because Facebook could not come to an internal evaluation. Should the employees invest now?
“While individuals must make their own decisions about participating in this program, I’m pleased that the price D.S.T. is offering is much greater than the price originally considered last fall,” said Mark Zuckerberg, Facebook’s chief executive, in a statement.
“This is recognition of Facebook’s growth and progress towards making the world more open and connected.”
A spokeswoman for Digital Sky Technologies, Jennifer Gill, has said that the offer to Facebook investors will remain open until some time in August so those eligible to participate have about a month to take advantage of the opportunity.
Senior Facebook management, board members and those who hold 5 percent or more of Facebook won’t be eligible to participate for legal reasons said Gill.
Despite Facebook’s phenomenal growth, (it recently topped the 200 million active user mark) and is the world’s fastest growing social networking site; they still have to overcome the problem of translating all that traffic into hard cash.
Nevertheless, Facebook says it revenues will grow by as much as 70% this year to over $500 million.
The company has no plans to go public as yet.
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Its crazy as to how simple of an idea Myspace and Facebook are, I wish I had come up with the idea…oh well, maybe next time.