Facebook’s $200 million windfall

"With a fresh $200 million in the bank,” said David Coursey in PC World, “Facebook is again well positioned to avoid growing up.” The social-networking site has failed to come up with a business plan to leverage its huge user community and actually turn a profit. Thanks to Facebook’s “Russian bailout plan,” it can put off the inevitable reckoning a little longer.

Somebody is going to have to face reality, and soon, said Gregory Corcoran in The Wall Street Journal. The cash infusion from Russian Internet investment group Digital Sky Technologies values Facebook at $10 billion. That’s shy of the $15 billion valuation implied by Microsoft’s $240 million investment in 2007, but with a recession on and profits still nowhere in sight, it’s unclear that Facebook’s “eyeballs” are worth as much as everyone seems to think.

“Facebook didn't land a $200 million investment at a $10 billion valuation because it's popular with the kids,” said Nicholas Carlson in Silicon Alley Insider. “It got that much because the plan is for Facebook to be a 'social utility' for people of all ages.” The trouble is, users over 55 are leaving the site in droves, and Facebook founder Mark Zuckerberg and company are in trouble if their moms aren’t on Facebook anymore.

The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up