Facebook is not worth $33,000,000,000

Minority investment valuations aren’t real
Facebook is now supposedly worth $33,000,000,000, but that number is entirely based on what star-struck minority investors have paid for a tiny slice of the company. The company has supposedly taken just under a billion dollars in venture capital and small secondary-market sales of stock. So the actual money that has changed hands is just 3% of the total evaluation of the company! In other words, the evaluation is resting on the flawed assumption that Facebook could actually ever get 33 times as much money to change hands if they wanted to. There’s just no way, no how that’s happening right now. If it could, they’d IPO tomorrow. So the Facebook evaluation based on minority investments is in my mind a complete joke in the sense that there was $33,000,000,000 dollars on the table. Irrational investor exuberance indeed.

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Now this was all fun and games until somebody promised the Newark schools $100 million in stock based on the fantasy evaluation of his under-profiting company. But now it’s real. They’re selling the skin before they shot the bear or peeing their pants to get to the hut or whatever you want to call it. It’s just not good, alright?

i’m not usually so negative about, seemingly, positive stories but this just doesn’t feel right to me or a friend whom it’s supposed to help (regardless of the PR spin/announcement happening same day as the social network hitting theaters).