(Iceland + Greenland) < Facebook?

While the post title may be somewhat misleading (and nerdy) I feel the need to discuss Facebook’s recent valuation (and here) – well the valuation it got few weeks ago. Now, I have nothing against Facebook, in fact I used to use it all the time. I don’t login nearly as much anymore but I still maintain an account and think that it offers some very useful tools. I’m still waiting for that hybrid LinkedIn + Facebook social network that I’m sure someone is working on but I’m ok with using them both right now.

Recent investments in Facebook by technology powerhouse Microsoft value the social network at a mere $15 billion. Microsoft invested $240 million for an estimated 1.6% stake in the company. I know Microsoft has some extremely deep pockets and as the world moves to a more web-centric focus (online document processing, business management, personal productivity, etc) they needed to do something relatively drastic…but really?!?

I don’t know about you, but I consider investing in a company and ultimately giving it a valuation greater than the combined GDP of Iceland ($11.38 billion) and Greenland ($1.1 billion) pretty drastic. Of course the GDP is an annual number and Facebook doesn’t quite make $15 billion a year but the thought of it being valued that high blows my mind. Part of that may be because I remember using the site in 2004 just after it expanded beyond just Harvard students and wasn’t anything overly impressive and ‘social networking’ as we know it today was relatively young.

I understand that Facebook’s valuation still doesn’t place it in the company of the Google’s, Microsoft’s and Exxon’s of the world with market caps ranging from $210 billion to almost $500 billion, but I still think that it is just slightly over-valued. To put things in perspective, the GDP of Greece is $256 billion and the GDP of Sweden is $290 billion.

Well that’s it for now, I just thought I’d share my thoughts.

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