Facebook valuation rumors swirling again

No surprise here: the company needs more cash, and investors are willing to bite, but at a lower valuation than Facebook wants.

Everybody's playing the Facebook valuation game again, in light of persistent reports that the social network is in need of more cash to fuel its rapid and expensive global expansion.

The rumors aren't too surprising. Given the recession and the tough advertising climate, the numbers getting tossed around are some of the lowest we've seen recently.

Currently circulating: Facebook CEO Mark Zuckerberg rejected a fresh round of funding that would have valued the company at $4 billion. Another: one potential investor submitted a term sheet for a valuation in the neighborhood of $2 billion.

What we've heard: Facebook stock trades privately at between a $2 billion and $3 billion valuation. That's consistent with the numbers that everybody else is tossing around. And we've known for a while that when the ConnectU vs. Facebook legal spat was settled, Facebook valued itself around $3.7 billion .

What's new this time around is that reports indicate Zuckerberg is extremely adamant about rejecting investment cash at a valuation he considers too low. When Facebook took a $240 million stake from Microsoft in November 2007, the investment was at a $15 billion valuation. Since then, it's become clear that it was a preferred-stock deal and that Facebook's true valuation has never been that high. But from what it sounds like, Zuckerberg would like it to get up there.

It was long before the massive Microsoft stake, after all, that Yahoo offered to buy the social network for $1 billion . Considering how much Facebook has grown since then--not to mention the new investments--the valuation shouldn't be only two or three times that.

"As a matter of policy, we don't comment on financial matters such as company valuation," a Facebook representative told CNET News in an e-mail.

This post was updated at 8:41 a.m. PT.

 

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