Facebook, MySpace Valuation

As per my last post, Google's missed earnings had led to questions about the revenue and valuation of social networks. Soon afterwards, Facebook revealed that it was targeting a revenue figure of $300 - $350 million this year with a EBITDA of $50 million. When Facebook raised money from Microsoft, their valuation was $15 billion giving the company a PE of nearly 300x.

Now, MySpace and Yahoo are in talks to merge, and supposedly Rupert Murdoch wants $6 - $10 billion for MySpace. Murdoch is a pretty shrewd dealmaker, so we assume thats the maximum he can squeeze out of this deal. But that means Facebook is worth 2-3x what Myspace is. Although Facebook is growing faster than MySpace, it still has only half as many users, and it's recent growth spurt has ended because of Facebook Beacon and because users are un-installing useless and annoying apps. (Also, note that Bebo is rumoured to be on sale for $1 billion) Its seems more likely, Facebook raised money at an inflated valuation and Microsoft should think twice about the value of their investment.