Facebook overvalued claims court documents

 

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By Matthew Sparkes

Posted on 8 Jul 2008 at 10:48

Court papers released during Facebook's legal struggle with ConnectU show that the social networking site is worth far less than previously thought.

Microsoft purchased a 1.6% stake in Facebook last year for $240 million, placing an estimated value of $15 billion on the company as a whole.

"Will Facebook be worth $5 billion (£2.5 billion), $15 billion or $50 billion some years down the line is really up to their team and how they take it forward," said Microsoft CEO Steve Ballmer at the time of the deal.

"The valuation of Facebook is still to be determined. Certainly today, it's very, very popular," he continued.

However, details of Facebook's internal valuation show that the company is believed to be worth just a fraction of this, some $3.75 billion.

The figure emerged in documents relating to the court case between Facebook and ConnectU, a dating website which claims that Facebook founder Mark Zuckerberg stole the idea behind the social networking site.

Facebook agreed to pay an undisclosed sum to settle the case, but ConnectU has claimed that the settlement is not valid, partly because of confusion over the true valuation of the company.

"The stock portion of the purported agreement is worth only one-quarter of its apparent value based on Facebook's public press releases," claim the court documents.